You have the following project available: Calculate the numbers that belong in the blank cells for project
Question:
You have the following project available:
Calculate the numbers that belong in the blank cells for project A to D.
Hint: For some projects, a second positive IRR may exist. For Project D, the payback period may be easier to express in words.
1. Add the payback periods for both Projects A and B, i.e., calculate: X = Payback Period of Project A + Payback Period of Project B.
a. 1
b. 2
c. 3
d. 4
e. 5
f. 6
g. 7
h. Project A never pays back the initial investment.
2. The payback period for Project D is:
a. 1
b. 2
c. 3
d. 4
e. 5
f. 6
g. 7
h. Project D never pays back the initial investment.
3. What is (are) the IRR(s) of Project C?
a. 0% only
b. 120.0% only
c. 13.6% is one of the IRRs and another IRR exists
d. 120.0% is one of the IRRs and another IRR exists
e. 13.6% only
f. 0% is one of the IRRs and another IRR exists
g. Project C has four IRRs.
h. No IRR exists for Project C.
4. What is the IRR of Project B?
a. 13.7%
b. 12.0%
c. 6.7%
d. 9.3%
e. 11.6%
f. 15.3%
g. Project B has multiple IRRs.
h. IRR doesn't exist.
5. What is the NPV of Project C?
a. $37,321.3
b. $74,444.8
c. -$10,000.0
d. $58,476.0
e. $692.9
f. $7,197.9
g. $8,543.6
h. The NPV cannot be calculated because the last cash flow is negative.
6. What is the profitability index (PI) of Project A?
a. 10%
b. -$50,000.0
c. $3,384.4
d. 1.00
e. 1.07
f. 15.5%
g. 2.00
h. The PI is negative.