Project #46983 - Chapter 13

1. 

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively.

  

               
  Time: 0 1 2 3 4 5 6
  Cash flow –$5,200 $1,290 $2,490 $1,690 $1,690 $1,490 $1,290

   

Use the NPV decision rule to evaluate this project. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)

 

  NPV   

 

Should it be accepted or rejected?

 

Rejected
Accepted

 

 

2. 

 

Compute the NPV statistic for Project Y if the appropriate cost of capital is 12 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal place.)

  

  Project Y          
  Time: 0 1 2 3 4
  Cash flow –$8,900 $3,530 $4,360 $1,700 $480

    

  NPV   

  

Should the project be accepted or rejected?
 
Accepted
Rejected

 

3. 

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 9 percent, and that the maximum allowable payback and discounted payback statistics for the project are 2.0 and 3.0 years, respectively.

  

               
  Time: 0 1 2 3 4 5 6
  Cash flow –$4,600 $1,160 $2,360 $1,560 $1,560 $1,360 $1,160

  

Use the discounted payback decision rule to evaluate this project. (Round your answer to 2 decimal places.)

 

  Discounted payback  years  

 

Should it be accepted or rejected?

 

Rejected
Accepted

 

4. 

Compute the payback statistic for Project A if the appropriate cost of capital is 9 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.)

  

  Project A            
  Time: 0 1 2 3 4 5
  Cash flow –$1,800 $670 $720 $680 $460 $260

  

  Payback  years  

  

Should the project be accepted or rejected?
 
Accepted
Rejected

 

5. 

Compute the NPV for Project K if the appropriate cost of capital is 7 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.)

   

  Project K            
  Time: 0 1 2 3 4 5
  Cash flow –$11,900 $5,950 $6,950 $6,950 $5,950 –$14,900

      

  NPV   

  

Should the project be accepted or rejected?
 
Rejected
Accepted

 

6. 

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 11 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3.0 and 3.5 years, respectively.

  

             
  Time: 0 1 2 3 4 5
  Cash flow –$238,000 $66,100 $84,300 $141,300 $122,300 $81,500

   

Use the discounted payback decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

  

  Discounted payback  years  

  

Should it be accepted or rejected?
 
Accepted
Rejected

 

7. 

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively.

  

               
  Time: 0 1 2 3 4 5 6
  Cash flow –$5,100 $1,240 $2,440 $1,640 $1,560 $1,440 $1,240

  
 

Use the payback decision rule to evaluate this project. (Round your answer to 2 decimal places.)


 

  Payback  years  


 

Should it be accepted or rejected?


 

Rejected
Accepted

 

8. 

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 11 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3 and 3.5 years, respectively.

  

             
  Time: 0 1 2 3 4 5
  Cash flow –$280,000 $56,800 $75,000 $123,000 $113,000 $72,200

  

Use the MIRR decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

 

  MIRR  %  

 

Should it be accepted or rejected?

 

Accepted
Rejected

 

9.

Compute the IRR for Project F. The appropriate cost of capital is 11 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

   

  Project F          
  Time: 0 1 2 3 4
  Cash flow –$11,100 $3,400 $4,230 $1,570 $2,200

     

  IRR  %  

  

Should the project be accepted or rejected?
 
Accepted
Rejected

 

10. 

Compute the MIRR statistic for Project J if the appropriate cost of capital is 8 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

   

  Project J            
  Time: 0 1 2 3 4 5
  Cash flow –$2,700 $860 $2,330 –$690 $810 –$270

   

  MIRR  %  

  

Should the project be accepted or rejected?
 
Rejected
Accepted

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Due By (Pacific Time) 11/17/2014 12:00 am
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