QUESTION:

Based on your analysis and given what you know about capital budgeting, which one of the following statements is correct regarding the Project just analyzed in the previous 5 questions (#11-#15)?

Multiple Choice

• You should accept the Project, since its Profitability Index is less than 1.0

• You should accept the Project since its IRR is lower than the hurdle rate of 15%

• You should accept the Project, since its Payback is less than 5 years

• You should accept the Project, since its NPV is positivE

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• (#11-#15)?

• You are analyzing a project with the following cash flows:

• The Project has a payback of 3.18 years

• The Project has a payback of 1.95 years

• The Project has a payback of 2.82 years

• The Project has a payback of 2.15 years

• You are analyzing a project with the following cash flows:

• The Project has a payback of 3.95 years

• The Project has a payback of 3.67 years

• The Project has a payback of 4.10 years

• The Project has a payback of 3.77 years

• Year 0: -350,000

  Year 1: + 120,000

  Year 2: + 85,000

  Year 3: +96,000

  Year 4: +270,000

• q12. What is the Discounted Payback for this project, using a 15% discount rate?

  Multiple Choice

• Year 0: -350,000

  Year 1: + 120,000

  Year 2: + 85,000

  Year 3: +96,000

  Year 4: +270,000

  What is the Payback for this project?

  Q13. You are analyzing a project with the following cash flows:What is the NPV for this project, using a 15% discount rate?

• Year 0: -350,000

• Year 1: + 120,000

  Year 2: + 85,000

  Year 3: +96,000

  Year 4: +270,000

• Q14.

• You are analyzing a project with the following cash flows:
• What is the IRR for this project?

  Year 0: -350,000

  Year 1: + 120,000

  Year 2: + 85,000

  Year 3: +96,000

  Year 4: +270,000

• Q15.

• You are analyzing a project with the following cash flows:
• What is the Profitability Index for this Project?

  Year 0: -350,000

  Year 1: + 120,000

  Year 2: + 85,000

  Year 3: +96,000

  Year 4: +270,000