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A firm is considering an investment project with the following cash flows: Year 0=-150,000 (initial costs); Year 1=$40,000, Year 2=$90,000; and Year 3=$30,000, Year 4=$60,000,

  1. A firm is considering an investment project with the following cash flows: Year 0=-150,000 (initial costs); Year 1=$40,000, Year 2=$90,000; and Year 3=$30,000, Year 4=$60,000, and Year 5 =$-10,000. The company has a 10% cost of capital. What is the projects discounted payback?
    1. 2.90 years
    2. 2.95 years
    3. 3.41 years
    4. 4.21 years
  2. A firm is considering an investment project with the following cash flows: Year 0=-150,000 (initial costs); Year 1=$40,000, Year 2=$90,000; and Year 3=$30,000, Year 4=$60,000, and Year 5 =$-10,000. The company has a 10% cost of capital, calculate the NPV for the project.
    1. $24,264
    2. $18,055
    3. $20,211
    4. $19,873
  3. A firm is considering an investment project with the following cash flows: Year 0=-150,000 (initial costs); Year 1=$40,000, Year 2=$90,000; and Year 3=$30,000, Year 4=$60,000, and Year 5 =$-10,000. The company has a 10% cost of capital, calculate the IRR for the project.
    1. 15.9%
    2. 16.2%
    3. 17.2%
    4. This is a non-normal cash flow project, so we can use IRR approach to evaluate it.
  4. A firm is considering an investment project with the following cash flows: Year 0=-150,000 (initial costs); Year 1=$40,000, Year 2=$90,000; and Year 3=$30,000, Year 4=$60,000, and Year 5 =$-10,000. The company has a 10% cost of capital, calculate the MIRR for the project.
    1. 12.4%
    2. 14.2%
    3. 11.8%
    4. 19.7%
  5. If a firm has paid $35,000 for a consulting firm for the feasibility analysis of a project. The estimated present value of all future cash inflows a cash outflows generated from this project (excluding the consulting fee) is $25,000. Should the investment be undertake?
    1. YES OR NO

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