Methods used to evaluate capital investment project

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Reference no: EM131348630

1. Which of the following is an ideal criteria for the methods used to evaluate a capital investment project?

A) The method must account for the success of previous projects.

B) None of the above

C) The method should consider the timing of the project’s cash flows.

D) The method should set require risk to be constant for all projects that will be considered.

2. A project will require $543,000 for fixed assets, $218,000 for inventory, and $42,000 for accounts receivable. Short-term debt is expected to increase by $165,000. The project has a six-year life. The fixed assets will be depreciated straight-line to a zero book value over the life of the project. The project is expected to generate annual sales of $905,000 with costs of $730,000. The tax rate is 35 percent and the required rate of return is 14 percent. What is the project's cash flow at Time 0? Please show your work for this question.thank you

-$536,000

-$638,000

-$720,000

-$779,000

-$944,000

Reference no: EM131348630

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