Question
Talent Inc. is considering a project that has the following cash flow data. (a) What is the project's payback period? (b) What is the project's
Talent Inc. is considering a project that has the following cash flow data. (a) What is the project's payback period? (b) What is the project's discounted payback period? Assume the cost of capital is 10%. Redesign Inc. is considering a project that has the following cash flow data. (a) What is the project's payback period? (b) What is the project's discounted payback period? Assume the cost of capital is 12%. Year 0 1 2 3 Cash flows -$500 $200 $200 $200 Calculate the required rate of return for Best Inc., assuming that (1) investors expect a 2% rate of inflation in the future, (2) the real risk-free rate is 3.0%, (3) the market risk premium is 4.0%, (4) the firm has a beta of 1.1, and (5) its realized rate of return has averaged 10.0% over the last 5 years. 14. Calculate the required rate of return for Hope Inc., assuming that (1) investors expect a 2.0% rate of inflation in the future, (2) the real risk-free rate is 3.5%, (3) the market return on S&P 500 Index is 8.5%, (4) the firm has a beta of 1.5, and (5) its realized rate of return has averaged 10.0% over the last 5 years. Berry Company is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's expected NPV can be negative, in which case it will be rejected. WACC:10% Year 0 1 2 3 4 5 Cash flows -$1,000 $400 $390 $380 $370 $360 5. Data Computer Systems is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's IRR can be less than the WACC (and even negative), in which case it will be rejected. Year 0 1 2 3 Cash flows -$1,200 $600 $550 $500 6. XYZ Corp. is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's IRR can be less than the WACC or negative, in both cases it will be rejected. Year 0 1 2 3 Cash flows -$1,000 $325 $425 $525 7. WWW Company is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's IRR can be less than the WACC or negative, in both cases it will be rejected. Year 0 1 2 3 4 Cash flows -$1,200 $400 $400 $400 $500
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