Question

**The Camel Company is considering the following project.
Assume discount rate of 12%.**

**YearCash Flow**

**0-100,000**

**1+25,000**

**2+50,000**

**3+55,000**

**4+75,000**

**(a) Compute NPV. Should the company accept or reject
this project. Justify.**

**(b) Compute IRR. Should the company accept or reject
this project. Justify.**

**(c) Compute PI. Should the company accept or reject this
project. Justify.**

**(d) Compute payback period. Should the company accept or
reject this project. Justify.**

Answer #1

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.

Risky Business is looking at a project with the following
estimated cash flow:
Initial investment at start of project: $13,000,000
Cash flow at end of year one: $2,080,000
Cash flow at end of years two through six: $2,600,000
each year
Cash flow at end of years seven through nine: $2,496,000
each year
Cash flow at end of year ten: $1,920,000
Risky Business wants to know the payback period, NPV, IRR,
MIRR, and PI of this project. The appropriate discount rate...

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.
Considering the following projects.
Project
Year
0
1
2
3
4
A
Cash flows
-$100
$35
$35
$35
$35
B
Cash flows
-$100
$60
$50
$40
$30
Project A has...

(Discounted payback period) Sheinhardt Wig Company is
considering a project that has the following cash flows: If the
project's appropriate discount rate is 9 percent, what is the
project's discounted payback period? The project's discounted
payback period is nothing years. (Round to two decimal
places.)
YEAR PROJECT CASH FLOW
0 -60,000
1 20,000
2 50,000
3 65,000
4 55,000
5 40,000

Q5
A company is considering a project that is expected to produce the
following cash flows over the next five years: $22,500, $27,900,
$41,800, $33,000, and $15,000 respectively. The company has $98,000
available, which is the amount needed to initiate the project.
Should the company accept this project if the required rate of
return is 12%? Why or why not?
Question 5 options: No; The IRR is 13.47%, which is greater than
the required return.
Yes; The PI is.96, which...

(Payback
period, NPV, PI, and IRR
calculations)
You are considering a project with an initial cash outlay of
$75,000
and expected free cash flows of
$26,000
at the end of each year for
5
years. The required rate of return for this project is
7
percent.
a. What is the project's payback period?
b. What is the project's
NPV?
c. What is the project's
PI?
d. What is the project's
IRR?

Suppose Cute Camel Woodcraft Company is evaluating a proposed
capital budgeting project (project Alpha) that will require an
initial investment of $450,000. The project is expected to generate
the following net cash flows:
Year
Cash Flow
Year 1
$375,000
Year 2
$475,000
Year 3
$400,000
Year 4
$500,000
Cute Camel Woodcraft Company’s weighted average cost of capital
is 10%, and project Alpha has the same risk as the firm’s average
project. Based on the cash flows, what is project Alpha’s...

Risky Business is looking at a project with the following
estimated cash flow:
Risky Business wants to know the payback period, NPV, IRR,
MIRR, and PI of this project.
The appropriate discount rate for the project is 8%.
If the cutoff period is 6 years for major projects,
determine whether the management at Risky Business will accept or
reject the project under the five different decision models.
Initial investment at start of project
13,500,000
Cash flow at end of year...

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...

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