Chstnut Tr Frms hs idntifid th following two mutully xclusiv projcts Ovr wht rng of discount rts would you choos Projct A A 8 28 prcnt or lss B 8 28 prcnt or mor C 9 33 prcnt or mor D 9 55 prcnt or lss E 9 55 prcnt or mor You'r trying to dtrmin whthr or not to xpnd your businss by building nw mnufcturing plnt Th plnt hs n instlltion cost of $26 million, which will b dprcitd stright lin to zro ovr its thr yr lif If th plnt hs projctd nt incom of $2,348,000, $2,680,000, nd $1,920,000 ovr ths thr yrs, wht is th projct's vrg ccounting rturn (AAR) A 11 69 prcnt B 14 14 prcnt C 15 08 prcnt D 17 82 prcnt E 19 21 prcnt Th nt prsnt vlu of projct's csh inflows is $8,216 t 14 prcnt discount rt Th profitbility indx is 1 03 nd th firm's tx rt is 34 prcnt Wht is th initil cost of th projct Th Blu Goos is considring projct with n initil cost of $42,700 Th projct will produc csh inflows of $8,000 yr for th first two yrs nd $12,000 yr for th following thr yrs Wht is th pybck priod Curtis is considring projct with csh inflows of $918, $867, $528, nd $310 ovr th nxt four yrs, rspctivly Th rlvnt discount rt is 11 prcnt Wht is th nt prsnt vlu of this projct if it th strt up cost is $2,100 Mry hs just bn skd to nlyz n invstmnt to dtrmin if it is ccptbl Unfortuntly, sh is not bing givn sufficint tim to nlyz th projct using vrious mthods Sh must slct on mthod of nlysis nd provid n nswr bsd solly on tht mthod Which mthod do you suggst sh us in this sitution A Intrnl rt of rturn B Pybck C Avrg ccounting rt of rturn D Nt prsnt vlu E Profitbility indx If projct with convntionl csh flows hs profitbility indx of 1 0, th projct will A nvr py bck B hv ngtiv nt prsnt vlu C hv ngtiv intrnl rt of rturn D produc mor csh inflows thn outflows in tody's dollrs E hv n intrnl rt of rturn tht quls th rquird rturn Which on of th following nlyticl mthods is bsd on nt incom A Profitbility indx B Intrnl rt of rturn C Avrg ccounting rturn D Modifid intrnl rt of rturn E Pybck I Stwrt's is considring nw projct Th compny hs dbt quity rtio of 0 72 Th compny's cost of quity is 15 1 prcnt, nd th ftrtx cost of dbt is 7 2 prcnt Th firm fls tht th projct is riskir thn th compny s whol nd tht it should us n djustmnt fctor of 2 prcnt Wht is th WACC it should us for th projct Year 0 1 1 Cash Flow (A) $60,000 20,800 14,300 17,200 27 900 Cash Flow (B) $60,000 39,500 12,600 11,500 11,600 2 3 4

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Chstnut Tr Frms hs idntifid th following two mutully xclusiv projcts: Ovr wht rng of discount rts would you choos Projct A? A. 8.28 prcnt

Chstnut Tr Frms hs idntifid th following two mutully xclusiv projcts: Ovr wht rng of discount rts would you choos Projct A? A. 8.28 prcnt or lss B. 8.28 prcnt or mor C. 9.33 prcnt or mor D. 9.55 prcnt or lss E. 9.55 prcnt or mor

You'r trying to dtrmin whthr or not to xpnd your businss by building nw mnufcturing plnt. Th plnt hs n instlltion cost of $26 million, which will b dprcitd stright-lin to zro ovr its thr-yr lif. If th plnt hs projctd nt incom of $2,348,000, $2,680,000, nd $1,920,000 ovr ths thr yrs, wht is th projct's vrg ccounting rturn (AAR)? A. 11.69 prcnt B. 14.14 prcnt C. 15.08 prcnt D. 17.82 prcnt E. 19.21 prcnt

Th nt prsnt vlu of projct's csh inflows is $8,216 t 14 prcnt discount rt. Th profitbility indx is 1.03 nd th firm's tx rt is 34 prcnt. Wht is th initil cost of th projct?

Th Blu Goos is considring projct with n initil cost of $42,700. Th projct will produc csh inflows of $8,000 yr for th first two yrs nd $12,000 yr for th following thr yrs. Wht is th pybck priod?

Curtis is considring projct with csh inflows of $918, $867, $528, nd $310 ovr th nxt four yrs, rspctivly. Th rlvnt discount rt is 11 prcnt. Wht is th nt prsnt vlu of this projct if it th strt up cost is $2,100?
Mry hs just bn skd to nlyz n invstmnt to dtrmin if it is ccptbl. Unfortuntly, sh is not bing givn sufficint tim to nlyz th projct using vrious mthods. Sh must slct on mthod of nlysis nd provid n nswr bsd solly on tht mthod. Which mthod do you suggst sh us in this sitution? A. Intrnl rt of rturn B. Pybck C. Avrg ccounting rt of rturn D. Nt prsnt vlu E. Profitbility indx
If projct with convntionl csh flows hs profitbility indx of 1.0, th projct will: A. nvr py bck. B. hv ngtiv nt prsnt vlu. C. hv ngtiv intrnl rt of rturn. D. produc mor csh inflows thn outflows in tody's dollrs. E. hv n intrnl rt of rturn tht quls th rquird rturn.
Which on of th following nlyticl mthods is bsd on nt incom? A. Profitbility indx B. Intrnl rt of rturn C. Avrg ccounting rturn D. Modifid intrnl rt of rturn E. Pybck

I. Stwrt's is considring nw projct. Th compny hs dbt-quity rtio of 0.72. Th compny's cost of quity is 15.1 prcnt, nd th ftrtx cost of dbt is 7.2 prcnt. Th firm fls tht th projct is riskir thn th compny s whol nd tht it should us n djustmnt fctor of +2 prcnt. Wht is th WACC it should us for th projct?

Year 0 1 1 Cash Flow (A) -$60,000 20,800 14,300 17,200 27.900 Cash Flow (B) -$60,000 39,500 12,600 11,500 11,600 2 3 4