Use the data from the second scenario to answer this question.

What is the pay back period for project A?

		1.96 years
		2.96 years
		3.96 years
		4.96 years

Below are the estimated cash flows for two mutually exclusive projects for a company. The company has a WACC of 12%.

Cash flows in M $

year / project a / project b

0 /$(45,000.00) /$(12,000.00)

1 /$ 2,000.00 / $2,000.00

2 / $ 5,000.00 / $2,000.00

3/ $12,000.00 / $3,000.00

4 /$27,000.00 / $ 5,000.00

5 / $30,000 / $8,000.00

Use the data from the second scenario to answer this question.

• 

2 1 Year A 0 $(45,000.00) $(12,000.00) 1 $ 2,000.00 $ 2,000.00 4 2 $ 5,000.00 $ 2,000.00 5 3 $ 12,000.00 $ 3,000.00 6 4 $ 27,000.00 $ 5,000.00 5 $ 30,000.00 $ 8,000.00 8 MIRR 13.69% 14.21% 9 NPV $ 3,494.84 $ 1,232.45 10 IRRI 14.18% 15.17% A 1 Year A 20 -45000 - 12000 3 1 2000 2000 4 2 5000 2000 5 3 12000 3000 64 27000 5000 75 30000 8000 8 MIRR =MIRR(B2:B7,12%, 12%) =MIRR(C2:C7,12%, 12%) 9 NPV =NPV (12%,B3:B7)+B2 =NPV(12%, C3:C7+C2 10 IRR =IRR(B2:B7) =IRR(C2:07)