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NPV, IRR, payback, year 1 cash flow, opportunity cost

5. Anderson Systems is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that if a project's expected NPV is negative, it should be rejected. WACC: 9.00%Year 0 1 2 3 Cash flows -$1,000 $500 $500 $500
A) $265.65
B) $278.93
C) $292.88
D) $307.52
E) $322.90

6. Simms Corp. is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's IRR can be less than the WACC or negative, in both cases it will be rejected.Year 0 1 2 3 Cash flows -$1,000 $425 $425 $425
A) 12.55%
B) 13.21%
C) 13.87%
D) 14.56%
E) 15.29%

7. Taggart 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 -$1,150 $500 $500 $500
A) 1.86 years
B) 2.07 years
C) 2.30 years
D) 2.53 years
E) 2.78 years

8. As assistant to the CFO of Boulder Inc., you must estimate the Year 1 cash flow for a project with the following data. What is the Year 1 cash flow? Sales revenues $13,000 Depreciation $4,000 Other operating costs $6,000 Tax rate 35.0%
A) $5,950
B) $6,099
C) $6,251
D) $6,407
E) $6,568

9. If an investment project would make use of land which the firm currently owns, the project should be charged with the opportunity cost of the land.
A) True
B) False

10. Changes in net working capital should not be reflected in a capital budgeting cash flow analysis because capital budgeting relates to fixed assets, not working capital.
A) True
B) False

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