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# 11.

value:
5.00 points
Garage, Inc., has identified the following two mutually exclusive
projects:
Year Cash Flow (A)
0
\$
29,700
1
15,100
2
13,000
3
9,550
4
5,450

\$
29,700
4,650
10,150
15,900
17,500

## At what discount rate would the company be indifferent between these

two projects? (Do not round intermediate calculations and round your
final answer to 2 decimal places. (e.g., 32.16))
Discount rate

12.value:
5.00 points
Consider the following two mutually exclusive projects:
Year Cash
0
\$
1
2
3

Flow (X)
20,300
8,925
9,250
8,875

## Cash Flow (Y)

\$
20,300
10,250
7,875
8,775

What is the crossover rate for these two projects? (Round your answer
to 2 decimal places. (e.g., 32.16)).
Crossover rate

13.value:
5.00 points
Light Sweet Petroleum, Inc., is trying to evaluate a generation project
with the following cash flows:
Year Cash Flow
0
\$
38,600,000
1
62,600,000
2

11,600,000

## Requires 11% rate of return.

b.
This project has two IRR's, namely ______??_____ percent and 40.84%,
in order from smallest to largest. (Note: If you can only compute one
IRR value, you should input that amount into both answer boxes in
order to obtain some credit.) (Negative amount should be indicated by
a minus sign. Round your answers to 2 decimal places. (e.g., 32.16))
16.value:
5.00 points
Consider the following two mutually exclusive projects:
Year Cash Flow (A)
0
\$
347,000
1
48,000
2
68,000
3
68,000
4
443,000

\$
49,500
24,300
22,300
19,800
14,900

## Whichever project you choose, if any, you require a 15 percent return

b-1
What is the discounted payback period for each project? (Do not round
places. (e.g., 32.16))
Discounted payback period
Project A years
Project B years
e-1
What is the profitability index for each project? (Do not round
places. (e.g., 32.161))
Profitability index
Project A
Project B
17.value:
5.00 points

## An investment has an installed cost of \$525,800. The cash flows over

the four-year life of the investment are projected to be \$223,850,
\$240,450, \$207,110, and \$155,820.
If the discount rate is infinite, what is the NPV? (Negative amount
should be indicated by a minus sign.)
NPV \$
18.value:
5.00 points
Slow Ride Corp. is evaluating a project with the following cash flows:
Year Cash Flow
0
\$
29,400
1
11,600
2
14,300
3
16,200
4
13,300
5

9,800
The company uses an interest rate of 8 percent on all of its projects.
Calculate the MIRR of the project using the discounting approach
method. (Do not round intermediate calculations and round your final
answer to 2 decimal places. (e.g., 32.16))
MIRR

## Calculate the MIRR of the project using the combination approach

method. (Do not round intermediate calculations and round your final
answer to 2 decimal places. (e.g., 32.16))
MIRR

19.value:
5.00 points
Slow Ride Corp. is evaluating a project with the following cash flows:
Year Cash Flow
0
\$
28,700
1
10,900
2
13,600

3
4
5

15,500
12,600
9,100

## The company uses a discount rate of 12 percent and a reinvestment

rate of 7 percent on all of its projects.
Calculate the MIRR of the project using the discounting approach
method. (Do not round intermediate calculations and round your final
answer to 2 decimal places. (e.g., 32.16))
MIRR

## Calculate the MIRR of the project using the reinvestment approach

method. (Do not round intermediate calculations and round your final
answer to 2 decimal places. (e.g., 32.16))
MIRR

## Calculate the MIRR of the project using the combination approach

method. (Do not round intermediate calculations and round your final
answer to 2 decimal places. (e.g., 32.16))
MIRR

20.value:
5.00 points
Anderson International Limited is evaluating a project in Erewhon. The
project will create the following cash flows:
Year Cash Flow
0
\$
1,260,000
1
435,000
2
500,000
3
395,000
4
350,000
All cash flows will occur in Erewhon and are expressed in dollars. In an
attempt to improve its economy, the Erewhonian government has
declared that all cash flows created by a foreign company are
blocked and must be reinvested with the government for one year.
The reinvestment rate for these funds is 3 percent.
If Anderson uses a required return of 12 percent on this project, what
are the NPV and IRR of the project? (Negative amount should be