Question: Below are the estimated cash flows for two mutually exclusive projects for a company. The company has a WACC of 11.23%. Use the data from
Below are the estimated cash flows for two mutually exclusive projects for a company. The company has a WACC of 11.23%.
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Use the data from the second scenario to answer this question.
What is the NPV of project A?
A. $1020.39 K$
B. $2055.06 K$
C. $5049.63 K$
D. $6770.87 K$
10.
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Use the data from the second scenario to answer this question.
What is the NPV of project B? (in K$)
A. $778.39 K$
B. $1,049.63 K $
C. $1206.22K $
D. $3052.20 K $
11.
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Based on your NPV results from the last 2 questions, which of the following should the company do?
A. Project A
B. Project B
C. Both project A and project B
D. Neither project A nor project B
12.
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Use the data from the second scenario to answer this question.
What is the IRR for project A?
A. 10.00%
B. 11.12%
C. 16.18%
D. 19.54%
13.
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Use the data from the second scenario to answer this question.
What is the IRR for project B?
A. 9.78%
B. 10.22%
C. 13.30%
D. 22.17%
14.
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Based on your IRR results from the last 2 questions, which of the following should the company do?
A. Project A
B. Project B
C. Both project A and project B
D. Neither project A nor project B
15.
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Use the data from the second scenario to answer this question.
What is the MIRR for project A? Use the WACC as both the finance rate and the reinvestment rate.
A. 7.69%
B. 10.00%
C. 12.34%
D. 14.03%
16.
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Use the data from the second scenario to answer this question.
What is the MIRR for project B? Use the WACC as both the finance rate and the reinvestment rate.
A. 9.69%
B. 12.91%
C. 13.21%
D. 14.79%
17.
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Use the data from the second scenario to answer this question.
What is the pay back period for project A?
A. 1.89 years
B. 2 years
C. 3 years
D. This project has no payback period.
18.
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Use the data from the second scenario to answer this question.
What is the pay back period for project B?
A. 3.26 years
B. 3.47 years
C. 4.34 years
D. There is not one, this project stays negative.
19.
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An advantage of the payback period method of evaluating a project is that it considers the time value of money.
True
False
20.
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Use the data from the second scenario to answer this question.
What is the discounted pay back period for project A?
A. 4.79 years
B. 4.57 years
C. 3.57 years
D. 2.91 years
21.
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Use the data from the second scenario to answer this question.
What is the discounted pay back period for project B?
A. less than 1 year
B. 3.97 years
C. 4.87years
D. There is not one, this project stays negative.
Year 0 Cash flows in K$ Project A Cash flows $ (15,500.00) $ $ 11,250.00 $ $ 4,750.00 $ $ 2,350.00 $ $ 2,000.00 $ $ 1,000.00 $ 1 Project B Cash flows (15,500.00) 1,000.00 2,000.00 3,000.00 4,000.00 16,000.00 2 3 4 nu 5
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