Case Cam Reddish Inc

Cam Reddish Inc. finances its three projects X, Y & Z with a WACC of 10 percent.

The firm offered a project X with the following cash flows:

Year Cash Flows

0 ($8,000)

1 $4,100

2 $3,600

3 $4,700

The company is thinking also of another two projects Y & Z with the following information:

Project Y Z

NPV $2,789.50 $453.00

MIRR 18.25% 9.55%

IRR 16.25% 8.56%

Discounted Payback Period 2.44 years 5.33 Year

1. NPV for X is:

$4,400.00

$2,233.66

$3,100.55

$20,400.00

MIRR for "X" is:

11.00%

19.41%

8.88%

15.64%

Payback Period for "X" is:

1.94 years

2.37 years

2.06 years

3.00 years

Discounted payback period for "X":

2.06 years

1.64 years

2.37 years

3.00 years

5. Assuming the three project X, Y & Z are independent then based on NPV criteria we can choose:

X, Y & Z

X & Z

Only X

Only Y

6. Assuming the three project X, Y & Z are Mutual Exclusive then based on NPV criteria we can choose:

X, Y & Z

X & Z

Only X

Only Y

7. Assuming the three project X, Y & Z are independent then based on MIRR criteria we can choose:

X, Y & Z

X & Y

Only X

Only Z

8. Assuming the three project X, Y & Z are Mutual Exclusive then based on MIRR criteria we can choose:

X, Y & Z

X & Y

Only X

Only Z

9. If IRR for X is 17.95%, and the three project X, Y & Z are Independent then based on IRR criteria we can choose:

X, Y & Z

X & Y

Only X

Only Y

10. Based on Discounted Payback Period we should choose:

Only X

Only Y

Only Z

X, Y & Z