Question

A.

A project has an initial cost of $57,200 and is expected to produce cash inflows of $19,800, $27,900, and $45,200 over the next 3 years, respectively. What is the project’s internal rate of return? |

18.92 percent

26.25 percent

16.86 percent

24.63 percent

B.

You are comparing two mutually exclusive projects. Both projects have an initial cost of $40,000 . Project A has cash inflows of $21,000 , $18,000 , and $15,000 over the next 3 years, respectively. Project B has cash inflows of $10,000 , $12,000 and $36,000 over the next 3 years. What is the crossover rate for Projects A and B? |

15.03 percent

13.56 percent

14.27 percent

15.29 percent

Answer #2

**A.** Let the IRR be x.

Now , Present Value of Cash Outflows=Present Value of Cash Inflows

57,200= 19,800/(1.0x) +27,900/ (1.0x)^2 +45,200/(1.0x)^3+

Or x= 24.63 %

Hence the correct answer is **24.63 percent**

---------

Initial Cash Investment = $40,000 - $ 40,000

= 0

Year 1 Cash Flow = $(10,000 - 21,000)

= - $ 11,000

Year 2 Cash Flow = $12,000 - $ 18,000

= - $ 6,000

Year 3 Cash Flow = $(36,000 - 15,000)

= $ 21,000

Based on the above calculations, IRR =

0 = - 11,000 / (1.0x)- 6,000 /(1.0x)^2 + 21,000/ (1.0x)^3

or x= 13.563%

= 13.56%

Hence the correct answer is **13.56 pecent**

answered by: anonymous

A project has an initial cost of $54,200 and is expected to
produce cash inflows of $19,200, $27,300, and $44,600 over the next
3 years, respectively. What is the project’s internal rate of
return?

A project has an initial cost of $10,000 and cash inflows of
$2,000, $4,000, $6,000, and $2,000 a year over the next four years,
respectively. What is the payback period?

Two mutually exclusive projects have an initial cost of $12,000.
Project A produces cash inflows of $10,200, $8,700, and $3,500 for
years 1 through 3 respectively. Project B produces cash inflows of
$6,700, $3,500, and $12,600 for years 1 through 3 respectively. The
required rate is 10 percent. which project would you choose to
invest in and why?

A project has an initial cost of $17,800 and produces cash
inflows of $7,200, $8,900, and $7,500 over three years,
respectively. What is the discounted payback period if the required
rate of return is 16 percent?

A project has an initial cost of $17,800 and produces cash
inflows of $7,200, $8,900, and $7,500 over three years,
respectively. What is the discounted payback period if the required
rate of return is 16 percent?

A proposed project has an initial cost of $38,000 and cash
inflows of $12,300, $24,200, and $16,100 for Years 1 through 3,
respectively. The required rate of return is 16.8 percent. Based on
IRR, should this project be accepted? Why or why not?

Project A has initial cost of $50,000, and annual cash flow of
$49,400, $27,200, and $24,500 in years 1, 2, and 3, respectively.
Project B has same initial cost of $50,000 but an annual cash
inflow of $18,500 for 4 years. These are mutually exclusive
projects. What is the crossover rate?

Two mutually exclusive projects have an initial cost of $60,000
each. Project A produces cash inflows of $30,000, $37,000, and
$20,000 for Years 1 through 3, respectively. Project B produces
cash inflows of $80,000 in Year 2 only. The required rate of return
is 10 percent for Project A and 11 percent for Project B. Which
project(s) should be accepted and why?
Project A, because it has the higher required rate of
return.
Project A, because it has the larger...

A project has an initial cash outflow of $42,600 and produces
cash inflows of $17,680, $19,920, and $15,670 for Years 1 through
3, respectively. What is the NPV at a discount rate of 12 percent?
Select one:
A. $186.95
B. –$108.19
C. $219.41
D. $229.09
E. $311.16

Project K has an initial cost of $81,996, and its expected net
cash inflows are $12,250 per year for 10 years. The firm has a WACC
of 7 percent, and Project K’s risk would be similar to that of the
firm’s existing assets. Calculate the discounted payback period of
Project K.

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 2 minutes ago

asked 3 minutes ago

asked 5 minutes ago

asked 13 minutes ago

asked 14 minutes ago

asked 14 minutes ago

asked 16 minutes ago

asked 20 minutes ago

asked 36 minutes ago

asked 38 minutes ago

asked 46 minutes ago

asked 49 minutes ago