1 Assume a project has normal cash flows All else equal, which of the following statements is CORRECT a The projects IRR is adversely affected by changes in the WACC b The projects regular payback increases as the WACC declines c The projects payback decreases as the WACC declines d The projects NPV increases as the WACC declines e The projects IRR increases as the WACC declines 2 ABC is evaluating a capital project that would have an initial cost of $136,246 The financial analyst says that the Net Present Value (NPV) is 185,928 Given that information, what is the project's Profitability Index (PI) 3 An investment promises cash flows in years 1, 2, and 3 of $33,000 In years 4 and 5, it will pay $59,000 If your required rate of return is 8 4 percent, what is that worth today

The Answer is in the image, click to view ...

Question: 1. Assume a project has normal cash flows. All else equal, which of the following statements is CORRECT? a. The projects IRR is adversely affected

1. Assume a project has normal cash flows. All else equal, which of the following statements is CORRECT?

	a.	The projects IRR is adversely affected by changes in the WACC.
	b.	The projects regular payback increases as the WACC declines.
	c.	The projects payback decreases as the WACC declines.
	d.	The projects NPV increases as the WACC declines.
	e.	The projects IRR increases as the WACC declines.

2. ABC is evaluating a capital project that would have an initial cost of $136,246. The financial analyst says that the Net Present Value (NPV) is 185,928. Given that information, what is the project's Profitability Index (PI)? 3. An investment promises cash flows in years 1, 2, and 3 of $33,000. In years 4 and 5, it will pay $59,000. If your required rate of return is 8.4 percent, what is that worth today?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Need assistance with this quiz I am currently taking. Question 1 Assume a project has normal cash flows. All else equal, which of the following statements is CORRECT? A project's NPV increases as the...

QUESTION 1 Assume a project has normal cash flows. All else equal, which of the following statements is CORRECT? A project's IRR increases as the WACC declines. A project's NPV increases as the WACC...

Assume a project has normal cash flows. All else equal, which of the following statements is CORRECT? Question 31 options: A) A project's NPV increases as the WACC declines. B) A project's MIRR is...

5. Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows. A projects NPV is found by...

Chapter 11: Capital Budgeting Assignment 1. Which of the following statements is CORRECT? The regular payback method recognizes all cash flows over a project's life. b. The discounted payback method...

2. Which of the following statements is CORRECT? Assume that the project being considerod has normal cash lows, with one outflow followed by a series of inflows a. A project's NPV is found by...

13. Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows. a. The IRR calculation implicitly...

asI. Which of the following statements is CORRECT? a. The shorter a project's payback period, the less desirable the project is normally considered to be Smt by this criterion. money, while the...

A company is considering a new project. The CFO plans to calculate the project's NPV by estimating the relevant cash flows for each year of the project's life (i.e., the initial investment cost, the...

Please answer all 5. Please and thank you :) 1. Roaring Camp Inc. projects $2,100 of sales, $1,200 of costs other than depreciation, $400 of depreciation, and $240 of net income for next year. Its...

Define stimulus discrimination. Why is it important?

When are sales and cost variances favorable and unfavorable?

What conditions would you have to meet as a small business or startup to secure a loan from a finicial instutition of your choice?

A simple CPM network has three activities, A , B , and C . A is an immediate predecessor of B and of C . B is an immediate predecessor of C . The activity durations are A = 4 , B = 3 , C = 5 . A ....

4.106 Faschip, Ltd., is a new African manufacturer of notebook computers. Their quality target is that 99.999% of the computers they produce will perform exactly as promised in the descriptive...

4.104 Federated South Insurance Company has developed a new screening program for selecting new sales agents. Their past experience indicates that 20% of the new agents hired fail to produce the...

4.100 George Allen has asked you to analyze his stock portfolio, which contains 10 shares of stock D and 5 shares of stock C. The joint probability distribution of the stock prices is shown in Table...