Question 6 (1 point)

Which ONE of the following statements about the payback method is true?

Question 6 options:

	The payback method is consistent with the goal of shareholder wealth maximization
	The payback method represents the number of years it takes a project to recover its initial investment plus a required rate of return.
	There is no economic rational that links the payback method to shareholder wealth maximization.
	None of these statements are true.

Question 7 (1 point)

McKenna Sports Authority is getting ready to produce a new line of gold clubs by investing $1.85 million. The investment will result in additional cash flows of $525,000, $847,500, and $1,215,000 over the next three years. What is the payback period for this project? Round to four decimal places.

Your Answer:

Question 7 options:

Answer

Question 8 (1 point)

Monroe, Inc., is evaluating a project. The company uses a 13.8 percent discount rate for this project. Cost and cash flows are shown in the table. What is the NPV of the project?

Year Project

0 ($11,368,000)

1 $ 2,157,589

2 $ 3,787,552

3 $ 3,125,650

4 $ 4,115,899

5 $ 4,556,424

Round to two decimal places.

Your Answer:

Question 8 options:

Answer