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# Business: NPV, IRR, Payback, WACC, and Operating Cash Flow

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1. Blanchford Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected.

WACC = 10%

Year: 0 1 2 3 4

Cash flows: -\$1,000 \$475 \$475 \$475 \$475

\$482.16
\$496.38
\$505.69
\$519.05
\$524.72

2.
Tapley Dental Associates is considering a project that has the following cash flow data. What is the project's payback?

Year: 0 1 2 3 4 5

Cash flows: -\$1,000 \$300 \$310 \$320 \$330 \$340

2.11 years
2.50 years
2.71 years
3.05 years
3.21 years

3.
Ryngaert Medical Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected.

WACC = 10%

Year: 0 1 2 3 4

Cash flows: -\$1,000 \$400 \$405 \$410 \$415

\$241.24
\$255.83
\$268.54
\$274.78
\$289.84

4.
Rockmont Recreation Inc. is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC (and even negative), in which case it will be rejected.

Year: 0 1 2 3 4

Cash flows: -\$1,000 \$250 \$230 \$210 \$190

-5.15%
-3.44%
-1.17%
2.25%
3.72%

5.
As a member of Gamma Corporation's financial staff, you must estimate the Year 1 operating net cash flow for a proposed project with the following data. What is the Year 1 operating cash flow?

Sales \$33,000

Depreciation \$10,000

Other operating costs \$17,000

Interest expense \$4,000

Tax rate 35%

\$ 9,500
\$10,600
\$11,700
\$12,800
\$13,900.