6) $165,000 is the initial cost. Positive cash inflows as follows Year 1- $63,120 , Year 2- 145,000. Assume we will accept the project if it pays back within 2 years.

Calculate the payback period? Round your answer to 1 decimal Answer

Based on your answers to the first six questions, what is the appropriate course of action to follow? Accept or reject

7) $165,000 is the initial cost. Positive cash inflows as follows Year 1- $63,120 , Year 2- 70,800 and Year 3- $91,080. Assume we will accept the project if it pays back within 3 years.

Calculate the payback period? Round your answer to two decimal points. Answer

Based on your answers to the first six questions, what is the appropriate course of action to follow?Accept or reject

8) In Chapter 9 we try to develop a methodology for discriminating between good and bad projects. Which of the following are attributes of a good methodology?

Select one:

a.Incorporates the time value of money

b.Adjusts for risk

c.Provides an indication of the wealth created or destroyed

d.All of the above statements are true

9) You are considering an investment with the following cash flows:

Year 0: -$145,000

Year 1: $200,000

Year 2: $250,000

Year 3: -$300,000

The firms hurdle rate is 10%. Should we accept or reject this project and why?

Select one:

a.No, IRR is less than the 10% hurdle rate

b.No, the NPV is negative

c.Yes, the IRR is less than the 10% hurdle rate

d.Yes, the NPV Is positive at a 10% discount rate

e.None of the above are true statements

10) A project is projected to cost $1,045,000 to undertake. It will generate positive cash inflows as follows: Year 1 - $200,000; Year 2 500,000; Year 3 - $650,000. What is the projects IRR?

Select one:

a.114%

b.12.9%

c.13.5%

d.14.0%

e.11.76%