Question

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 is considered an acceptance signal.

No; Atlantic would lose $2,407 in NPV if they accept the
project.

Yes; Atlantic will make $3,567 in NPV if they accept the
project.

No; The PI is 1.04, which is considered a reject signal.

Answer #1

✓ Answer: Yes, Atlantic will make $ 3567 in NPV if they accept the project.

2. A company is considering a project that has the following
cash flows: C0 = -3,000, C1 = +900, C2 = +500, C3 = +1,100, and C4
= +1,900, with a risk-adjusted discount rate of 8%. A) Calculate
the Net Present Value (NPV), Internal Rate of Return (IRR),
Modified Internal Rate of Return (MIRR), and Profitability Index
(PI) of this project. B) If you were the manager of the firm, will
you accept or reject the project based on the...

Your company is considering an
expansion into a new product line. The project cash flows are as
follows:
Year
Project A
0
-$60,000
1
44,000
2
20,000
3
14,000
The
required return for this project is 10%.
What is the NPV for the project?
What is the IRR for the project?
What...

A company is considering a project with the following cash
flows:
Time Cash Flow
0 -$100 <<<<<<< negative
1 $100
2 -$100 <<<<<<< negative
3 $120 At a cost of capital of 10%:
a. What is the NPV?
b. What is the Modified Internal rate of Return?
Should the company accept this project?

Your company is considering a project which has the expected
cash flows as follows.
year
0
1
2
3
4
5
6
7
8
9
10
cash flow
-500
90
100
150
180
190
140
100
80
60
-50
The required return for the project is 15% per annum.
(1) What is the NPV?
(2) What are 2 IRRs?
(3) Draw the NPV profile
(4) What are the MIRR?
(5) Should your company take this project?

Project P costs $15,000 and is expected to produce benefits
(cash flows) of $4,500 per year for five years. Project Q costs
$37,500 and is expected to produce cash flows of $11,100 per year
for five years. Calculate each project’s (a) net present value
(NPV), (b) internal rate of return (IRR), and (c) mod- ified
internal rate of return (MIRR). The firm’s required rate of return
is 14 percent. Compute the (a) NPV, (b) IRR, (c) MIRR,
and (d) discounted payback...

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.

Light Sweet Petroleum, Inc., is trying to evaluate an
exploration project with the following cash flows:
Year Cash Flow
0 -$39,000,000
1 63,000,000
2 -12,000,000
If the company requires a 12 percent return on its investments,
should it accept this project?
Yes, the IRR is below the 12% hurdle rate
No, the IRR is above the 12% hurdle rate
Cannot determine because there are multiple IRRs
Yes, the NPV is positive
No, the NPV is negative

A company is considering a project with the following expected
cash flows: Year 0: -$685,000 Year 1: $305,000 Year 2: $305,000
Year 3: $305,000 The company requires a 15% return on investment.
Compute the NPV for the project. (Do not round intermediate
calculations. Round the final answer to 2 decimal places. Omit any
commas and the $ sign in your response. For example, an answer of
$1,000.50 should be entered as 1000.50.)

You are considering two independent projects with the following
cash flows. The required return for both projects is 10%. Given
this information, which one of the following statements is
correct?
Year Project A Project B
0 -950,000 -125,000
1 330,000
55,000
2 400,000
50,000
3 450,000
50,000
You should accept project B because it has the higher IRR and
reject project A
You should accept project A because it has the higher NPV and
you can not accept both projects
You should accept...

Two projects being considered are mutually exclusive and have
the following cash flows:
Year
Project A
Project B
0
−$50,000
−$50,000
1
15,625
0
2
15,625
0
3
15,625
0
4
15,625
0
5
1,562
89,500
If the required rate of return on these projects is 13 percent,
which would be chosen and why?
a.
Project B because of higher NPV.
b.
Project B because of higher IRR.
c.
Project A because of higher NPV.
d.
Project A because of...

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