Chapter 9-Capital Investment Criteria Exercise Fill in the blanks 1. When applying the payback rule, a capital project is acceptable when 2. When applying the Net Present Value (NPV) rule, a capital project is acceptable when 3. When applying the Internal Rate of Return (IRR) rule, a capital project is acceptable when Tapley Dental Associates is considering a project that has the following cash flow data. What is the project's payback period? 4. Year Cash flow: $1,000 300 $310 $320 $330 $340 a) 2.50 years b) 2.71 years c) 3.05 years d) 3.21 years Rockmont Recreation Inc. is considering a project that has the following cash flows and required return. What is the project's NPV? 5. Required rate of return: 10% Year 0 Cash flow: $1,000 $450 $440 $430 a) $88.84 b) $92.25 c) 95.79 d) $98.49 Based on the cash flows on the time-line below, what is the project's internal rate of return (IRR)? 6. Year Cash flow: $1,000 $450 $450 $450 a) b) c) d) 11.67% 16.65% 17.10% 35.00%