Need help in validating the answers i currently have. Also need help with question I haven't answered.

1.ABC Inc. is considering a project that has the following cash flow and WACC data.

What is the project's NPV?Note that if a project's expected NPV is negative, it should be rejected.

WACC:6%

Year012345

Cash flows-$1,200$200$400$400$300$300

Npv = - initial cash outflow + present value of cash inflows

npv=-1200+(200/(1.06^1))+(400/(1.06^2))+(400/(1.06^3))+(300/(1.06^4))+(300/(1.06^5))

NPV= $142.33

This project will be accepted.

2.ABC Enterprises is considering a project that has the following cash flow and WACC data.What is the project's NPV?Note that a project's expected NPV can be negative, in which case it will be rejected.

WACC:5%

Year0123

Cash flows-$1,050$450$460$470

npv=-1050+(450/(1.05^1))+(460/(1.05^2))+(470/(1.05^3))

NPV= $201.81

This project will be accepted.

3.Warranty Inc. is considering a project that has the following cash flow and WACC data.

What is the project's NPV?Note that a project's expected NPV can be negative, in which case it

will be rejected.

WACC:10%

Year0123

Cash flows-$950$500$400$300

npv= -950+(500/(1.10^1))+(400/(1.10^2))+(300/(1.10^3))

NPV= $60.52

This project will be accepted.

4.Berry Company is considering a project that has the following cash flow and WACC

data.What is the project's NPV?Note that a project's expected NPV can be negative, in which

case it will be rejected.

WACC:8%

Year012345

Cash flows-$1,000$400$390$380$370$360

NPV= $523.36

5.Data Computer Systems is considering a project that has the following cash flow data.What is the project's IRR?Note that a project's IRR can be less than the WACC (and even negative), in which case it will be rejected.

Year0123

Cash flows-$1,200$600$550$500

IRR= 18.42%

6.XYZ Corp. is considering a project that has the following cash flow data.What is the project's IRR?Note that a project's IRR can be less than the WACC or negative, in both cases it will be rejected.

Year0123

Cash flows-$1,000$325$425$525

IRR= 12.14%

7.WWW Company is considering a project that has the following cash flow data. What is the project's IRR?Note that a project's IRR can be less than the WACC or negative, in both cases it will be rejected.

Year01234

Cash flows-$1,200$400$400$400$500

IRR= 14.97%

8.Talent Inc. is considering a project that has the following cash flow data.

(a) What is the project's payback period?

(b) What is the project's discounted payback period?

Assume the cost of capital is 8%.

Year0123

Cash flows-$1,150$500$500$600

9.Redesign Inc. is considering a project that has the following cash flow data.

(a) What is the project's payback period?

(b) What is the project's discounted payback period?

Assume the cost of capital is 10%.

Year0123

Cash flows-$500$200$200$200

10 .ABC Inc.'s stock has a 30% chance of producing a 20% return, a 40% chance of

producing a 0% return, and a 30% chance of producing a -15% return.What is the firm's

expected rate of return?

11.XYZInc. is considering a capital budgeting project that has an expected return of 32%

and a standard deviation of 12%.What is the project's coefficient of variation?

Coefficient of variation = Standard deviation / Expected return = 12/32= 0.375

12.An Investor has $200,000 invested in a 2-stock portfolio.$50,000 is invested in Stock X

and the remainder is invested in Stock Y.X's beta is 1.5 and Y's beta is 1.70.What is the

portfolio's beta?

E(R_p)= 0.15 = w_x(1.70)

13.Calculate the required rate of return for Best Inc., assuming that (1) investors expect a

3% rate of inflation in the future, (2) the real risk-free rate is 3.0%, (3) the market risk premium

is 5.0%, (4) the firm has a beta of 1.2, and (5) its realized rate of return has averaged 10.0%

over the last 5 years.

Real risk-Free rate + inflation

= 3%+3% = 6%

Required rate of return = 6%+1.2.*5.0%

=12%

14.Calculate the required rate of return for Hope Inc., assuming that (1) investors expect a

2.0% rate of inflation in the future, (2) the real risk-free rate is 3.5%, (3) the market return on

S&P 500 Index is 8.5%, (4) the firm has a beta of 1.5, and (5) its realized rate of return has

averaged 10.0% over the last 5 years.

Nominal Risk Free rate = 3.5% + 2% = 5.5%

Risk Free Rate = 5.5%

Market Return = 8.5%

5.5% + 1.5(8.5%-5.5%) = 5.5% + 4.5% = 10% is the required rate of return for Hope Inc.

15.Chance Inc's stock has an expected return of 15%, a beta of 1.5, and is in

equilibrium.Assume the nominal risk-free rate is 4.00%.

(a) what is the market risk premium?

(b) What is the equity risk premium?

The MRP = Expected return- Risk free rate / Beta

=15-4/1.5

=11/1.5

=7.33%

What is the equity risk premium?

The Equity risk premium= Expected return - Risk free rate

=15%-4%

=11.00%