HIGHLIGHT ANSWERS

13. What is the IRR for 6 years? A. 5.69% B. 2.00% C. 56.87% D. 0.57% of a project that costs $100,000 and provides cash inflows of $17,000 annually 14. Which of the following statements is true for a project with $20,000 initial cost, cash inflows of $5,800 per year for 6 years, and a discount rate of 1 590? A. Its payback period is roughly 3 1/2 years. B. Its NPV is $2,194. C. Its IRR is 1.85%. D. Its profitability index is 0.109. 15. What is the maximum that should be invested in a project at time zero if the inflows are estimated at $50,000 annually for 3 years, and the cost of capital is 9%? A. $126,565.00 B. $101,251.79 C. $130,800.00 D. $109,200.00 16, what percentage change in sales occurs if profits increase by 3% when the firm's degree of operating leverage is 4.5? A. 0.33% B. 0.67% C. 3.33% D. 1.5%