Finance Study Help:

When evaluating a project, the best metrics to use are: Independent and exclusive NPV and IRR IRR and payback period Payback period and Profitability Index If you invest $1000 in a new machine that will generate $300 of annual after tax cash flows for 6 years (at the end of each year), what is the IRR? 22.9% 80.0% 15.2% 19.9% Which of the following projects should you reject? A project with a positive NPV of only 25 cents ($0.25) A project with a low IRR but it has a positive NPV. A project with a 20% IRR and a NPV of negative $4 million (-$4,000,000) A project with a 14% IRR when WACC is 12%. You are considering investing $600 in PP&E that generates $100 cash flow every year for five years. At the end of five years, you will sell the equipment for approximately $500. If your cost of capital is 10%, you should: Do not invest because the project has a negative NPV of around -$90 Do not invest because the IRR is below the cost of capital Invest because the sum of the cash flows is $1,000 and the project only costs $600. Invest because the project has a positive NPV of around $90 You are considering a project that costs $300 that will generate the following cash flow over the next seven years: $80, $90, $120, $120, $90, $70, $30. The payback period is: 4 years 3 years and one month 3 years 2 times