our boss, the chief financial officer (CFO), has just handed you the estimated cash flows for two
Question:
our boss, the chief financial officer (CFO), has just handed you the estimated cash flows for two proposed projects: Project L and Project S. Both projects have 3-year lives.
After-tax cash flows (in millions of dollars):
Year | CFL | CFS |
0 | ($100) | ($100) |
1 | $10 | $70 |
2 | $60 | $50 |
3 | $80 | $20 |
Use the weighted average cost calculated in question 6 above.
What is the NPV of Project L?
a. | approximately $20 million | |
b. | approximately $14 million | |
c. | approximately $200 million | |
d. | approximately $110 million |
4 points
QUESTION 10
What is the NPV of Project S?
a. | approximately $17 million | |
b. | approximately $100 million | |
c. | approximately $25 million | |
d. | approximately $60 million |
QUESTION 13
What is the MIRR for Project L?
a. | approximately 17% | |
b. | approximately 27% | |
c. | approximately 30% | |
d. | None of the choices |
4 points
QUESTION 14
What is the MIRR for Project S?
a. | approximately 18% | |
b. | approximately 35% | |
c. | approximately 2% | |
d. | approximately 10% |
Fundamentals of Financial Management
ISBN: 978-0324597707
12th edition
Authors: Eugene F. Brigham, Joel F. Houston