Question

**7.** Refer to **Exhibit 2** below.
What is the project’s payback period?

**8.** Refer to **Exhibit 2** below.
If the firm’s WACC is 10%, what is the project’s NPV?

**9.** Refer to **Exhibit 2** below.
What is the project’s IRR (to one decimal place, e.g., 5.1%)?

**10.** Refer to **Exhibit 2** below.
If the firm’s WACC is 10%, what is the project’s MIRR (to one
decimal place, e.g., 5.1%)?

**Exhibit 2**

A firm is considering a project with the following cash flows.

Year |
0 |
1 |
2 |
3 |

Cash Flows |
-$800 |
$200 |
$500 |
$1,000 |

EXCEL WILL DO

Answer #1

11. The NPV and payback period
What information does the payback period provide?
A project’s payback period (PB) indicates the number of years
required for a project to recover its initial investment using its
operating cash flows. As the theoretical soundness of the
conventional (undiscounted) PB technique was criticized, the model
was modified to incorporate the time value of money-adjusted
operating cash flows to create the discounted payback method. While
both payback models continue to reflect faulty ranking criteria,
they...

7. The NPV and payback
period
What information does the payback period
provide?
Suppose Extensive Enterprises’s CFO is evaluating a project with
the following cash inflows. She does not know the project’s initial
cost; however, she does know that the project’s regular payback
period is 2.5 years.
Year
Cash Flow
Year 1
$325,000
Year 2
$500,000
Year 3
$450,000
Year 4
$450,000
If the project’s weighted average cost of capital (WACC) is 8%,
what is its NPV?
$367,583
$312,446
$404,341...

1. Multiple internal rates or return occur when:
Select one:
A. The project’s cash flows are larger earlier in the life of
the project.
B. The project’s cash flows are larger later in the life of the
project.
C. When the project’s cash flows experience normal cash flow
streams (i.e. one sign change).
D. When the project’s cash flows experience non-normal cash flow
streams (i.e. two or more sign changes).
E. When the IRR is equal to the WACC.
2....

A project has the following cash flows. What is the payback
period, NPV, PI, IRR, MIRR, and EAA? Assume an interest rate of
5%.
Year CF ($)
0) -5,000
1). 2,700
2). 3,300
3) 1,400
4). 330
5) 340
Also upload your excel files showing your work.

You are considering a project with an initial cash outlay of
$100,000 and expected free cash flows of $23,000 at the end of each
year for 6 years. The required rate of return for this project is
10 percent.
a. What is the project’s payback period?
b. What is the project’s discounted payback period?
c. What is the project’s NPV ?
d. What is the project’s PI ?
e. What is the project’s IRR ?
f. What is the project’s...

Telesis Corp is considering a project that has the
following cash flows:
Year
Cash Flow
0
-$1,000
1
400
2
300
3
500
4
400
The company’s weighted average cost of capital (WACC) is
10%. What are the project’s payback period (Payback), internal rate
of return (IRR), net present value (NPV), and profitability index
(PI)?
A.
Payback = 3.5, IRR = 10.22%, NPV = $1260, PI=1.26
B.
Payback = 2.6, IRR = 21.22%, NPV = $349, PI=1.35
C.
Payback =...

ABC Corporation is considering a project that provides the
following cash flows steam:
Year
0
1
2
3
4
5
Cash flows
-$1,000
$375
$425
$250
$110
$100
If WACC is 10%, what is NPV, and
should the company accept the project?
Find IRR, MIRR,
payback, and discounted payback
period.

Please show your steps! Question 1
a) What is the NPV, IRR, and payback period of a project with
the following cash flows if WACC is 20%?
Time: 0
1
2
3
4
5
-$350,000
$100,000
$100,000
$100,000
$50,000
$50,000
NPV=
IRR=
Payback period=
b) Should you accept or reject the project according to NPV and
IRR?
*can you please include greater than an less than signs.* Thank
you.

Anderson Systems is considering a project that has the following
cash flow and WACC data.
WACC = 11.50%
Year
0
1
2
3
4
Cash flows
($1,000)
$350
$350
$350
$350
a) What is the project's NPV?
b) What is the project’s IRR?
c) What is the project’s payback period?

Braun Industries is considering an investment project which has
the following cash flows: Year Cash Flow 0 -$1,000 1 400 2 300 3
500 4 400 The company's WACC is 10 percent. What is the project's
payback, internal rate of return, and net present value? Select
one: a. Payback = 2.6, IRR = 21.22%, NPV = $300. b. Payback = 2.6,
IRR = 21.22%, NPV = $260. c. Payback = 2.4, IRR = 10.00%, NPV =
$600. d. Payback =...

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