QUESTION 9

Your boss, the chief financial officer (CFO), has just handed you the estimated cash flows for two proposed projects: Project L and Project S. Both projects have 3-year lives.

After-tax cash flows (in millions of dollars):

Year	CFL	CFS
0	($100)	($100)
1	$10	$70
2	$60	$50
3	$80	$20

Use the weighted average cost calculated in question 6 above.

What is the NPV of Project L?

	a.	approximately $20 million
	b.	approximately $14 million
	c.	approximately $200 million
	d.	approximately $110 million

4 points

QUESTION 10

What is the NPV of Project S?

	a.	approximately $17 million
	b.	approximately $100 million
	c.	approximately $25 million
	d.	approximately $60 million

4 points

QUESTION 11

What is the IRR of Project L?

	a.	approximately 18%
	b.	approximately 25%
	c.	approximately 32%
	d.	approximately 13%

4 points

QUESTION 12

What is the IRR of Project S?

	a.	approximately 18%
	b.	approximately 24%
	c.	approximately 50%
	d.	approximately 22%

4 points

QUESTION 13

What is the MIRR for Project L?

	a.	approximately 17%
	b.	approximately 27%
	c.	approximately 30%
	d.	None of the choices

4 points

QUESTION 14

What is the MIRR for Project S?

	a.	approximately 18%
	b.	approximately 35%
	c.	approximately 2%
	d.	approximately 10%

4 points

QUESTION 15

What is the Payback period of Project L?

	a.	2.9
	b.	2.4
	c.	1.7
	d.	1.6

4 points

QUESTION 16

What is the Payback period of Project S?

	a.	1.6
	b.	2.4
	c.	2.9
	d.	1.9