Objective type questions on payback period npv irr and mirr

Reference no: EM1314175

Objective type questions on payback period, NPV, IRR and MIRR

Jamaica Corp. is adding a new assembly line at a cost of $8.5 million. The firm expects the project to generate cash flows of $2 million, $3 million, $4 million, and $5 million over the next four years. Its cost of capital is 16 percent.

1. What is the payback period for this project?

a. 2.8 years

b. 2.9 years

c. 3.1 years

d. 3.4 years

2. What is the net present value of this project?

a. $645,366

b. $1,213,909

c. $905,888

d. $777,713

3. What is the internal rate of return that Jamaica can earn on this project? (Round to the nearest percent.)

a. 18%

b. 19%

c. 20%

d. 21%

4. What is the MIRR on this project? (Round to the nearest percent.)

a. 18%

b. 19%

c. 20%

d. 21%

Reference no: EM1314175

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