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A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year WN -

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A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year WN - 0 Cash Flow 327,100 11,100 14,100 10,100 What is the NPV for the project if the required return is 12 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV At a required return of 12 percent, should the firm accept this project? Yes What is the NPV for the project if the required return is 24 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g.. 32.16.) NPV At a required return of 24 percent, should the firm accept this project? Yes No What is the payback period for the following set of cash flows? (Round your answer to 2 decimal places, e.g., 32.16.) Cash Year: Flow ON $5,500 1,550 1,750 2,150 1,650 Payback period Year Cash Flow o-NM Cash Flow (A) 347,000 48,000 68,000 68,000 443,000 49,500 24,300 22,300 19,800 14,900 Whichever project you choose, if any, you require a return of 15 percent on your investment. 2-1 What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) years Project A Project B years a-2 If you apply the payback criterion, which investment will you choose? Project A Project B b-1 What is the discounted payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Project A Project B years Year 0 Cash Flow (X) -$20,700 9,025 9,450 8,975 Cash Flow (Y) 20,700 10,450 7,975 8,875 WN Calculate the IRR for each project. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Project X Project X Project Y A What is the crossover rate for these two projects? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Crossover rate What is the NPV of Projects X and Y at discount rates of 0 percent, 15 percent, and 25 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Project X Project Y

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