Purchase Solution

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

Not what you're looking for?

Ask Custom Question

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

Purchase this Solution
Solution Summary

This solution illustrates and discusses the concepts listed in the title.

Purchase this Solution
Free BrainMass Quizzes
Lean your Process

This quiz will help you understand the basic concepts of Lean.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

View More Free Quizzes
Related BrainMass Solutions

  • Capital Budgeting - Payback, NPV, PI, IRR

    Since the cash flow is an annuity, Payback period = $70,000 / $20,000 = 3.5 years Example 2: Suppose the cash flow for a project is as follows: Initial investment = $10,000 Year 1-5 cash inflows: Year Cash flow 1 $2,000 2 $2,500

  • Calculating various capital budgeting parameters

    This investment will cost the firm $150,000 today, and the firm's cost of capital is 8 percent. a. What is the Payback Period, Discounted Payback Period, NPV, IRR, and MIRR for this investment? b.

  • Capital Budgeting Technique Effects: NPV, IRR, & Simple Payback

    319547 Capital Budgeting Technique Effects: NPV, IRR, & Simple Payback Summarize the resulting NPV explaining the effects of cost of capital and a very complete analysis of the 3 capital budgeting techniques of NPV, IRR, and simple payback.

  • Walker Landscaping Company end of year cash flows

    Payback = Year before full recovery + Unrecovered cost at start of year Cash flow during year Payback = 1 + (3,200 - 800)/3,000 Payback = 1.80 years b) IRR The internal rate of return is defined as that discount rate which equates

  • IRR Decision: What is the Breakeven Point, NPV, and IRR ofor Project Alpha?

    Calculate the IRR of the following project: Year Cash Flow 0 -$30,000 1 $40,000 NPV = C(0) + C(1)/(1+r) = -$30,000 + ($40,000/(1+r) Set NPV = 0 Substitute X = 1/(1+IRR) 0 = -$30,000 + $40,000X = $40,000X = $30,000 = X = $30,000/$40,000 = 0.75

  • Capital Budgeting and Scenario Manager in Excel

    Calculate the NPV, profitability index, IRR, MIRR, payback and discounted payback of the cash flows in part 1. 3.

  • investment appraisal methods

    Different types of appraisal methods include payback period, discounted cash flow approach or NPV approach, accounting rate of return and IRR or internal rate of return method. Let us explain this one by one.

  • Payback period, IRR, and NPV

    1 onwards>add investment cost The following posting contains calculations of payback period, IRR, and NPV for 3 investments, provided in an Excel file.

  • Discounted Payback, IRR

    Discounted Payback Period Payback period is the number of years in which the initial investment is recouped Payback Period = Year before full recovery + (unrecovered cost at start of year/Cash Flow during year)

View More Related Solutions