Project A has cash flows of $50,000, $49,400, $27,200, and $24,500 for Years 0 to 3, respectively. Project B has an initial cost of $50,000 and an annual cash inflow of $18,500 for four years. These are mutually exclusive projects. What is the crossover rate?

30.89 percent

16.08 percent

30.89 percent

Cannot be computed

16.08 percent

7

71

A project with an initial cost of $51,200 is expected to generate annual cash flows of $16,030 for the next 5 years. What is the project's internal rate of return?

18.50%

18.97%

16.22%

17.07%

15.37%

8

81

A project has cash flows of $161,900, $60,800, $62,300, and $75,000 for Years 0 to 3, respectively. The required rate of return is 13 percent. Based on the internal rate of return of _____ percent for this project, you should _____ the project.

9.67; accept

10.41; reject

11.67; accept

10.41; accept

9.67; reject

9

91

Assume a project has cash flows of $54,300, $18,200, $37,300, and $14,300 for Years 0 to 3, respectively. What is the profitability index given a required return of 12.6 percent?

.946

.98

1.02

1.06

1.00

10

101

A project has an initial cost of $95,200, a life of 9 years, and equal annual cash inflows. The required return is 8.5 percent. According to the profitability index decision rule, what is the minimum annual cash flow necessary to accept the project?

$16,972.30

$10,577.78

$18,386.65

$15,557.94

$14,361.17