A companys weighted average cost of capital is 9.5% per year. A project requires an investment of $4.9 million today and it is expected to generate after-tax cash flows of $1.7 million at the end of year 1, $2.4 million at the end of year 2 and, $3.3 million at the end of year 3. What is the projects net present value?

2

A companys weighted average cost of capital is 9.9% per year. A project requires an investment of $1,200 today and it is expected to generate after-tax cash flows of $400 per year for the next five years. What is the projects payback period?

3

The yield to maturity on a companys debt is 6.2% per year and the companys cost of equity financing is 10.9% per year. The book value of the debt is $30.0 million and the book value of the equity is $15.0 million. The companys tax rate is 32%. The market value of the debt is $36.9 million and the market value of the equity is $27.1 million. What is the companys annual weighted average cost of capital?

4

A project requires an investment of $125,000 today and it is expected to generate after-tax cash flows of $5,000 per month for the next three years. The companys weighted average cost of capital is 9.6% per year. What is the projects annual modified internal rate of return?

A companys weighted average cost of capital is 12.8% per year. Which of the following independent projects should it pursue?

Project IRR

1-12.2%

2-11.8%

3-13.1%

4-12.6%