1. Project L requires an initial outlay at t = 0 of $60,621, its expected cash inflows are $9,000 per year for 11 years, and its WACC is 13%. What is the project's IRR? Round your answer to two decimal places.

2. Project L requires an initial outlay at t = 0 of $49,000, its expected cash inflows are $10,000 per year for 9 years, and its WACC is 9%. What is the project's payback? Round your answer to two decimal places.

years

3. Your division is considering two projects with the following cash flows (in millions):

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2

3

Project A	-$16	$7	$9	$10
Project B	-$26	$14	$20	$11

What are the projects' NPVs assuming the WACC is 5%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.

Project A: $ million

Project B: $ million

What are the projects' NPVs assuming the WACC is 10%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.

Project A: $ million

Project B: $ million

What are the projects' NPVs assuming the WACC is 15%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.

Project A: $ million

Project B: $ million

What are the projects' IRRs assuming the WACC is 5%? Do not round intermediate calculations. Round your answer to two decimal places.

Project A: %

Project B: %

What are the projects' IRRs assuming the WACC is 10%? Do not round intermediate calculations. Round your answer to two decimal places.

Project A: %

Project B: %

What are the projects' IRRs assuming the WACC is 15%? Do not round intermediate calculations. Round your answer to two decimal places.

Project A: %

Project B: %

If the WACC was 5% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 48.57%.)

-Select-Project AProject BNeither A nor BItem 13

If the WACC was 10% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 48.57%.)

-Select-Project AProject BNeither A nor BItem 14

If the WACC was 15% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 48.57%.)

-Select-Project AProject BNeither A nor B

4. A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows:

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1

2

3

4

5

Project M	-$9,000	$3,000	$3,000	$3,000	$3,000	$3,000
Project N	-$27,000	$8,400	$8,400	$8,400	$8,400	$8,400

Calculate NPV for each project. Do not round intermediate calculations. Round your answers to the nearest cent.

Project M: $

Project N: $

Calculate IRR for each project. Do not round intermediate calculations. Round your answers to two decimal places.

Project M: %

Project N: %

Calculate MIRR for each project. Do not round intermediate calculations. Round your answers to two decimal places.

Project M: %

Project N: %

Calculate payback for each project. Do not round intermediate calculations. Round your answers to two decimal places.

Project M: years

Project N: years

Calculate discounted payback for each project. Do not round intermediate calculations. Round your answers to two decimal places.

Project M: years

Project N: years

Assuming the projects are independent, which one(s) would you recommend?

-Select-Only Project M would be accepted because NPV(M) > NPV(N).Only Project N would be accepted because NPV(N) > NPV(M).Both projects would be accepted since both of their NPV's are positive.Only Project M would be accepted because IRR(M) > IRR(N).Both projects would be rejected since both of their NPV's are negative.Item 11

If the projects are mutually exclusive, which would you recommend?

-Select-If the projects are mutually exclusive, the project with the highest positive NPV is chosen. Accept Project N.If the projects are mutually exclusive, the project with the highest positive IRR is chosen. Accept Project M.If the projects are mutually exclusive, the project with the highest positive MIRR is chosen. Accept Project M.If the projects are mutually exclusive, the project with the shortest Payback Period is chosen. Accept Project M.If the projects are mutually exclusive, the project with the highest positive IRR is chosen. Accept Project N.Item 12

Notice that the projects have the same cash flow timing pattern. Why is there a conflict between NPV and IRR?

5. A company is analyzing two mutually exclusive projects, S and L, with the following cash flows:

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Project S	-$1,000	$875.31	$260	$15	$5
Project L	-$1,000	$5	$240	$400	$838.10

The company's WACC is 8.5%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places.

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