For this question and the next 4 (five questions in all), use the following information: The Pembroke Perpetual Property Planning Programme is considering two projects for the same piece of property. They can build a library (Project "L") or they can build a school of business (Project "S"), but they cannot build both on this same lot (that is, they are "mutually exclusive"). The cash flows associated with each project are listed below. The firm requires a 12% return on projects of this type and risk. Cash flows in parentheses "(x)" are negative, i.e., outflows.

1) What is the approximate Payback Period for each project?

a) Payback_L = 3.33 years Payback_S = 2.95 years

b) Payback_L = 12% Payback_S = 15%

c) Payback_L = 2.333 years Payback_S = 2.333 years

d) Payback_L = 3 years Payback_S = 3 years

2) What is the approximate DISCOUNTED Payback Period for each project?

a) DP_L = 12% DP_S = 12%

b) DP_L = 2 years DP_S = 3 years

c) The actual value cannot be calculated with the information given, but

DP_L = DP_S

d) DP_L = 2 years DP_S = 2 years

e) DP_L = 3.33 years DP_S = 2.95 years

3) What is the approximate Net Present Value for each project?

a) NONE of these is the approximate Net Present Value of the projects.

b) NPV_L = ($8.33) NPV_S = $0.00

c) NPV_L = $300 NPV_S = $40.00

d) NPV_L = 14.5% NPV_S = 20.9%

e) NPV_L = $42.39 NPV_S = $13.69

4) What is the approximate Internal Rate of Return for each project?

a) IRR_L = 13.2% IRR_S = 16.5%

b) IRR_L = 12.0% IRR_S = 12.0%

c) IRR_L = 14.5% IRR_S = 20.9%

d) IRR_L = 6.8% IRR_S = 10.7%

e) IRR_L= $14.49

IRR_S = $20.90

5) Which project IF ANY should PPPPP build?

You may wish to revist your solutions to the previous 4 questions...

a) BOTH projects should be built.

b) NEITHER project is acceptable.

c) PPPPP should build Project L.

d) PPPPP should build Project S.

e) We cannot tell which is best unless we know the decisions rules they use for each capital budgeting method.

For this question and the next 4 (five questions in all), use the following information: The Pembroke Perpetual Property Planning Programme is considering two projects for the same piece of property. They can build a library (Project L) or they can build a school of business (Project S), but they cannot build both on this same lot (that is, they are mutually exclusive). The cash flows associated with each project are listed below. The firm requires a 12% return on projects of this type and risk. Cash flows in parentheses (x) are negative, i.e., outflows.1) What is the approximate Payback Period for each project? a) PaybackL = 3.33 years PaybackS = 2.95 years b) PaybackL = 12% PaybackS = 15% c) PaybackL = 2.333 years PaybackS = 2.333 years d) PaybackL = 3 years PaybackS = 3 years 2) What is the approximate DISCOUNTED Payback Period for each project? a) DPL = 12% DPS = 12% b) DPL = 2 years DPS = 3 years c) The actual value cannot be calculated with the information given, but DPL = DPS d) DPL = 2 years DPS = 2 years e) DPL = 3.33 years DPS = 2.95 years 3) What is the approximate Net Present Value for each project? a) NONE of these is the approximate Net Present Value of the projects. b) NPVL = ($8.33) NPVS = $0.00 c) NPVL = $300 NPVS = $40.00 d) NPVL = 14.5% NPVS = 20.9% e) NPVL = $42.39 NPVS = $13.69 4) What is the approximate Internal Rate of Return for each project? a) IRRL = 13.2% IRRS = 16.5% b) IRRL = 12.0% IRRS = 12.0% c) IRRL = 14.5% IRRS = 20.9% d) IRRL = 6.8% IRRS = 10.7% e) IRRL= $14.49 IRRS = $20.90 5) Which project IF ANY should PPPPP build? You may wish to revist your solutions to the previous 4 questions... a) BOTH projects should be built. b) NEITHER project is acceptable. c) PPPPP should build Project L. d) PPPPP should build Project S. e) We cannot tell which is best unless we know the decisions rules they use for each capital budgeting method