Question: Question 331 pts Last month, Lloyd's Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the

Question 331 pts

Last month, Lloyd's Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Note that a project's projected NPV can be negative, in which case it should be rejected.

Old WACC:	10.00%		New WACC:	11.50%
Year	0	1	2	3
Cash flows	-$1,000	$410	$410	$410

Group of answer choices

-$26.86

-$26.34

-$23.44

-$20.54

-$30.81

Flag question: Question 34

Question 341 pts

Which of the following statements is CORRECT?

Group of answer choices

One defect of the IRR method versus the NPV is that the IRR does not take account of cash flows over a projects full life.

One defect of the IRR method versus the NPV is that the IRR does not take proper account of differences in the sizes of projects.

One defect of the IRR method versus the NPV is that the IRR values a dollar received today the same as a dollar that will not be received until sometime in the future.

One defect of the IRR method versus the NPV is that the IRR does not take account of the cost of capital.

One defect of the IRR method versus the NPV is that the IRR does not take account of the time value of money.

Flag question: Question 35

Question 351 pts

Mansi Inc. is considering a project that has the following cash flow data. What is the project's payback?

Year	0	1	2	3
Cash flows	-$750	$300	$325	$350

Group of answer choices

2.24 years

2.03 years

2.43 years

1.93 years

2.36 years

Flag question: Question 36

Question 361 pts

Rivoli Inc. hired you as a consultant to help estimate its cost of capital. You have been provided with the following data: D₀ = $0.80; P₀ = $25.00; and g = 8.00% (constant). Based on the DCF approach, what is the cost of equity from retained earnings? Do not round your intermediate calculations.

Group of answer choices

13.17%

11.46%

9.74%

14.32%

9.85%

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