Problem 22 04 A firm has the following investment alternatives Cash Inflows Year A B C 1 $ 830 $ 2,622 2 830 3 830 $ 3,230 Each investment costs $2,300 investments B and C are mutually exclusive, and the firms cost of capital is 9 percent Use Appendix A, Appendix B and Appendix D to answer the questions Assume that the investments are not mutually exclusive and there are no budget restrictions What is the net present value of each investment Use a minus sign to enter a negative values, if any Round your answers to the nearest dollar A $ B $ C $ According to the net present values, which investment(s) should the firm make The firm should make investment(s) Select ABCA and BA and CItem 4 What is the internal rate of return on each investment Round your answers to the nearest whole number A B C According to the internal rates of return, which investment(s) should the firm make The firm should make investment(s) Select ABCA and BA and CItem 8 According to both the net present values and internal rates of return, which investments should the firm make The net present value and internal rate of return lead to Select the same decisiondifferent decisionsItem 9 so the firm should Select select investment Aselect investment Bselect investment Cselect investments A and Bselect investments A and Cresolve the conflict between B and CItem 10 If the firm could reinvest the $2,622 earned in year 1 from investment B at 10 percent, which investment(s) should the firm make Round your answer to the nearest dollar Terminal value of investment B $ The firm should make investment(s) Select ABCA and BA and CItem 12 Would the answer be different if the rate were 12 percent Round your answer to the nearest dollar Terminal value of investment B $ The firm should make investment(s) Select ABCA and BA and CItem 14 If the firms cost of capital had been 10 percent, what would be investment As internal rate of return Round your answer to the nearest whole number The payback method of capital budgeting selects which investment The payback method of capital budgeting selects investment Select ABCItem 16

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Problem 22-04 A firm has the following investment alternatives: Cash Inflows Year A B C 1 $ 830 $ 2,622 2 830 3 830 $

Problem 22-04

A firm has the following investment alternatives:

	Cash Inflows
Year		A		B		C
1		$	830	$	2,622
2			830
3			830			$	3,230

Each investment costs $2,300; investments B and C are mutually exclusive, and the firms cost of capital is 9 percent. Use Appendix A, Appendix B and Appendix D to answer the questions. Assume that the investments are not mutually exclusive and there are no budget restrictions.

What is the net present value of each investment? Use a minus sign to enter a negative values, if any. Round your answers to the nearest dollar.
A: $

B: $

C: $
According to the net present values, which investment(s) should the firm make?
The firm should make investment(s) -Select-ABCA and BA and CItem 4 .
What is the internal rate of return on each investment? Round your answers to the nearest whole number.
A: %

B: %

C: %
According to the internal rates of return, which investment(s) should the firm make?
The firm should make investment(s) -Select-ABCA and BA and CItem 8 .
According to both the net present values and internal rates of return, which investments should the firm make?
The net present value and internal rate of return lead to -Select-the same decisiondifferent decisionsItem 9 so the firm should -Select-select investment Aselect investment Bselect investment Cselect investments A and Bselect investments A and Cresolve the conflict between B and CItem 10 .
If the firm could reinvest the $2,622 earned in year 1 from investment B at 10 percent, which investment(s) should the firm make? Round your answer to the nearest dollar.
Terminal value of investment B: $

The firm should make investment(s) -Select-ABCA and BA and CItem 12 .
Would the answer be different if the rate were 12 percent? Round your answer to the nearest dollar.
Terminal value of investment B: $

The firm should make investment(s) -Select-ABCA and BA and CItem 14 .
If the firms cost of capital had been 10 percent, what would be investment As internal rate of return? Round your answer to the nearest whole number.
%
The payback method of capital budgeting selects which investment?
The payback method of capital budgeting selects investment -Select-ABCItem 16 .