Question
You are analyzing a project with the following cash flows: Year 0: -240,000 Year 1: + 10,000 Year 2: + 55,000 Year 3: +100,000 Year
- You are analyzing a project with the following cash flows:
Year 0: -240,000
Year 1: + 10,000
Year 2: + 55,000
Year 3: +100,000
Year 4: +380,000
What is the NPV for this project, using a 15% discount rate?
Multiple Choice
-
The Project has an NPV of $69,281
-
The Project has an NPV of $58,445
-
The Project has an NPV of $70,617
-
The Project has an NPV of $93,301
What is the IRR for this project?
Multiple Choice
-
The Project has an IRR of 26.51%
-
The Project has an IRR of 28.13%
-
The Project has an IRR of 22.93%
-
The Project has an IRR of 19.32%
What is the Payback for this project:
Multiple Choice
-
The Project has a payback of 3.20 years
-
The Project has a payback of 3.88 years
-
The Project has a payback of 3.05 years
-
The Project has a payback of 3.28 years
What is the Profitability Index for this Project
Multiple Choice
-
The Project has a P.I. of 1.65
-
The Project has a P.I. of 2.33
-
The Project has a P.I. of 1.39
-
The Project has a P.I. of 1.44
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 (#14-#18)?
Multiple Choice
-
You should accept the Project since its IRR is lower than the hurdle rate of 15%
-
You should reject the Project
-
You should accept the Project, since its Profitability Index is less than 1.0
-
You should accept the Project, since its NPV is positive
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