Reference no: EM132493612

Question 1 What is the net present value of a project with the following cash flows if the required rate of return is 8 percent?

Question 2 What is the net present value of a project that has an initial cash flow of $37,400 and the following cash inflows? The required rate is 9.2 percent? Would you accept the project? Why?

Year 1          Cash inflows

1                    $13,400

2                  $20,100

3                       0

4                      $10,120

Question 3 You are considering the following two mutually exclusive projects. The required rate of return is 12.2 percent for project A and 11.5 percent for project B. Which project should be accepted and why?

Year        Project A        Project B

0               ($54,000)     ($54,000)

1                25,120           43,000

2                37,000            22,000

3                24,000            12,700

Question 4 It will cost $6,650 to acquire a candy-making machine. Candy sales are expected to be $3,700 a year for three years. After the three years, the candy-making machine is expected to be obsolete due to advances in technology which will render the low capacity machine valueless only after three years. What is the payback period?

Question 5 A project has an initial cost of $7,400. The cash inflows are $950, $2,300, $3,400 and $4,000 over the next three years, respectively. What is the payback period?

Question 6 Professional Decorators is considering a project with the following cash flows. What is the IRR of this project?

Year            Cash flow

0               ($115,421)

1                    37,200

2                     52,300

3                     49,100

Question 7 An investment has the following cash flows and a required return of 12 percent. Based on IRR, should this project be accepted? Why or why not?

Year Cash flow

0 ($49,000)

1 17,280

2 31,000

3 8,400