Please answer 10 questions within one and half hour.

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1. Award: 6.00 points An investment project provides cash inflows of $690 per year for eight years. What is the project payback period if the initial cost is $1,475? What if the initial cost is $3,500? What if it is $5,700? What is the project payback period if the initial cost is $1,475? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16)) Payback period years What is the project payback period if the initial cost is $3,500? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16)) Payback period years What is the project payback period if the initial cost is $5,700? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16)) Payback period years References WorksheetDifficulty: BasicLearning Objective: 09-02 The payback rule and some of its shortcomings. 2. Award: 6.00 points An investment project costs $10,000 and has annual cash flows of $2,820 for six years. What is the discounted payback period if the discount rate is zero percent? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16)) years Discounted payback period What is the discounted payback period if the discount rate is 4 percent? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16)) years Discounted payback period What is the discounted payback period if the discount rate is 19 percent? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16)) years Discounted payback period References WorksheetDifficulty: BasicLearning Objective: 09-03 The discounted payback rule and some of its shortcomings. 3. Award: 6.00 points A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year 0 1 2 3 Cash Flow -$28,100 12,100 15,100 11,100 If the required return is 15 percent, what is the IRR for this project? (Round your answer to 2 decimal places. (e.g., 32.16)) IRR % Should the firm accept the following project? No Yes References WorksheetDifficulty: BasicLearning Objective: 09-05 The internal rate of return criterion and its strengths and weaknesses. 4. Award: 6.00 points A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year 0 1 2 3 Cash Flow -$28,100 12,100 15,100 11,100 What is the NPV for the project if the required return is 12 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) NPV $ At a required return of 12 percent, should the firm accept this project? No Yes What is the NPV for the project if the required return is 24 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) NPV $ At a required return of 24 percent, should the firm accept this project? Yes No References WorksheetDifficulty: BasicLearning Objective: 09-01 The reasons why the net present value criterion is the best way to evaluate proposed investments. 5. Award: 6.00 points A project that provides annual cash flows of $17,500 for eight years costs $81,000 today. What is the NPV for the project if the required return is 7 percent? (Round your answer to 2 decimal places. (e.g., 32.16)) NPV $ At a required return of 7 percent, should the firm accept this project? Accept Reject What is the NPV for the project if the required return is 19 percent? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16)) NPV $ At a required return of 19 percent, should the firm accept this project? Accept Reject At what discount rate would you be indifferent between accepting the project and rejecting it? (Round your answer to 2 decimal places. (e.g., 32.16)) % Discount rate References WorksheetLearning Objective: 09-01 The reasons why the net present value criterion is the best way to evaluate proposed investments. Difficulty: BasicLearning Objective: 09-05 The internal rate of return criterion and its strengths and weaknesses. 6. Award: 6.00 points What is the IRR of the following set of cash flows? (Round your answer to 2 decimal places. (e.g., 32.16)) Year 0 1 2 3 Cash Flow -$16,500 7,200 8,500 7,000 % IRR References WorksheetDifficulty: BasicLearning Objective: 09-05 The internal rate of return criterion and its strengths and weaknesses. 7. Award: 6.00 points A project has the following cash flows: Year 0 1 2 3 Cash Flow -$16,900 7,600 8,900 7,400 What is the NPV at a discount rate of zero percent? $ NPV What is the NPV at a discount rate of 12 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) $ NPV What is the NPV at a discount rate of 21 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) $ NPV What is the NPV at a discount rate of 28 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) $ NPV References WorksheetDifficulty: BasicLearning Objective: 09-01 The reasons why the net present value criterion is the best way to evaluate proposed investments. 8. Award: 6.00 points The Angry Bird Corporation is trying to choose between the following two mutually exclusive design projects: Year 0 Cash Flow (I) -$ 72,000 Cash Flow (II) -$ 17,200 1 2 3 32,000 32,000 32,000 9,300 9,300 9,300 a-1 If the required return is 10 percent, what is the profitability index for both projects? (Round your answers to 3 decimal places. (e.g., 32.161)) Profitability Index Project I Project II a-2 If the company applies the profitability index decision rule, which project should the firm accept? Project I Project Il b-1 What is the NPV for both projects? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16)) Project I Project II NPV $ $ b-2 If the company applies the NPV decision rule, which project should it take? Project I Project II rev: 12_03_2012 References WorksheetLearning Objective: 09-01 The reasons why the net present value criterion is the best way to evaluate proposed investments. Difficulty: BasicLearning Objective: 09-07 The profi tability index and its relation to net present value. 9. Award: 6.00 points An investment has an installed cost of $526,800. The cash flows over the four-year life of the investment are projected to be $222,850, $239,450, $206,110, and $154,820. If the discount rate is zero, what is the NPV? NPV $ If the discount rate is infinite, what is the NPV? (Negative amount should be indicated by a minus sign.) NPV $ At what discount rate is the NPV just equal to zero? (Round your answer to 2 decimal places. (e.g., 32.16)) IRR % References WorksheetDifficulty: BasicLearning Objective: 09-01 The reasons why the net present value criterion is the best way to evaluate proposed investments. 10. Award: 6.00 points The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is "looking up". As a result, the cemetery project will provide a net cash inflow of $90,000 for the firm during the first year, and the cash flows are projected to grow at a rate of 5 percent per year forever. The project requires an initial investment of $1,430,000. a-1 What is the NPV for the project if Yurdone's required return is 10 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) NPV $ a-2 If Yurdone requires a return of 10 percent on such undertakings, should the firm accept or reject the project? Accept Reject b. The company is somewhat unsure about the assumption of a 5 percent growth rate in its cash flows. At what constant growth rate would the company just break even if it still required a return of 10 percent on investment? (Round your answer to 2 decimal places. (e.g., 32.16)) Constant growth rate % References WorksheetDifficulty: ChallengeLearning Objective: 09-01 The reasons why the net present value criterion is the best way to evaluate proposed investments. 2016 McGraw-Hill Education. All rights reserved