Question
Will is trying to select the best investment from among 3 alternatives. Each alternative involves an initial outlay of 100,000$. Their cash flows returns for
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Will is trying to select the best investment from among 3 alternatives. Each alternative involves an initial outlay of 100,000$. Their cash flows returns for each project are as follows (in $):
year project A project B project C 1 30,000 0 40,000 2 30,000 0 40,000 3 30,000 50,000 40,000 4 30,000 50,000 0 5 30,000 60,000 0
a) Which project would be selected if the payback method is used?
b) Which project would be selected if the net present value is used at a 5% discount rate?
c) Which project would be selected if the net present value is used at a 10% discount rate?
**Please note that there are part marks available. You can also upload notes to the dropbox after the exam.**
I. a, a, a
II. a, a, b
III. a, a, c
IV. a, b, a
V. a, b, b
VI. a, b, c
VII. a, c, a
VIII. a, c, b
IX. a, c, c
X. b, a, a
XI. b, a, b
XII. b, a, c
XIII. b, b, a
XIV. b, b, b
XV. b, b, c
XVI. b, c, a
XVII. b, c, b
XVIII. b, c, c
XIX. c, a, a
XX. c, a, b
XXI. c, a, c
XXII. c, b, a
XXIII. c, b, b
XXIV. c, b, c
XXV. c, c, a
XXVI. c, c, b
XXVII. c, c, c
Will is trying to select the best investment from among 3 alternatives. Each alternative involves an initial outlay of 100,000$. Their cash flows returns for each project are as follows (in $):
year | project A | project B | project C |
1 | 30,000 | 0 | 40,000 |
2 | 30,000 | 0 | 40,000 |
3 | 30,000 | 50,000 | 40,000 |
4 | 30,000 | 50,000 | 0 |
5 | 30,000 | 60,000 | 0 |
a) Which project would be selected if the payback method is used?
b) Which project would be selected if the net present value is used at a 5% discount rate?
c) Which project would be selected if the net present value is used at a 10% discount rate?
**Please note that there are part marks available. You can also upload notes to the dropbox after the exam.**
I. | a, a, a | |
II. | a, a, b | |
III. | a, a, c | |
IV. | a, b, a | |
V. | a, b, b | |
VI. | a, b, c | |
VII. | a, c, a | |
VIII. | a, c, b | |
IX. | a, c, c | |
X. | b, a, a | |
XI. | b, a, b | |
XII. | b, a, c | |
XIII. | b, b, a | |
XIV. | b, b, b | |
XV. | b, b, c | |
XVI. | b, c, a | |
XVII. | b, c, b | |
XVIII. | b, c, c | |
XIX. | c, a, a | |
XX. | c, a, b | |
XXI. | c, a, c | |
XXII. | c, b, a | |
XXIII. | c, b, b | |
XXIV. | c, b, c | |
XXV. | c, c, a | |
XXVI. | c, c, b | |
XXVII. | c, c, c |
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