QUESTION 1

1. Maxwell Feed & Seed is considering a project that has the following cash flow data. What is the project's IRR?

   Year 0 1 2 3 4 5

   Cash flows -$9,500 $2,000 $2,025 $2,050 $2,075 $2,100

   		2.82%
   		3.10%
   		2.08%
   		2.31%
   		2.57%

10 points

QUESTION 2

1. Which of the following are limitations of the regular payback period

   		it takes into account the time value of money
   		it utilizes an arbitrary cut-off criterion
   		it uses cash flows generated by the project beyond the end of the payback period
   		it is simple to calculate

10 points

QUESTION 3

1. Jefferson Corporation is considering an expansion project. The necessary equipment could be purchased for $15 million and shipping and installation costs are another $500,000. The project will also require an initial $2 million investment in net working capital. The company's tax rate is 40%. What is the project's initial investment outlay (in millions)?

   		$15.0
   		none of the other available choices
   		$17.5
   		$15.5
   		$17.0

10 points

QUESTION 4

1. Ella Inc. is considering purchasing a new milling machine. The new machine costs $133,143, plus installation fees of $15,193 and will generate revenue of $3,458,356 per year and cost of good sold of $1,010,884 over its 5-year life. The machine will be depreciated on a straight-line basis over its 5-year life to an estimated salvage value of 0. Mystics marginal tax rate is 0%. Mystic will require $23,868 in NWC if the machine is purchased. Determine the annual operating cash flow in if the machine is purchased. round your answer to two decimals

10 points

QUESTION 5

1. You have been offered a unique investment opportunity. If you invest $875 today, you will receive $319 one year from now, $798 two years from now, and $1,937 three years from now. What is the NPV of the opportunity if the cost of capital is 8% per year?