Question 1. Calculating Payback What is the payback period for the following collection of cash flows?

YearCash Flow
0−$7,600
1 1,900
2 2,900
3 2,300
4 1,700

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Question 3. Calculating Payback Siva, Inc., imposes a payback cutoff of 3 years because that its worldwide investment projects. If the agency has the complying with two jobs available, have to it accept either the them?.

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YearCash circulation (A)Cash flow (B)
0−$45,000−$ 55,000
1 16,000 13,000
2 21,000 15,000
3 15,000 24,000
4 9,000 255,000

Question 4. Calculating Discounted Payback an investment task has annual cash inflows that $2,800, $3,700, $5,100, and $4,300, because that the next 4 years, respectively. The discount rate is 14 percent. What is the discounted payback period for these cash flows if the initial price is $5,200? What if the initial expense is $5,400? What if that is $10,400

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Question6. Calculating AAR you trying to recognize whether to increase your service by structure a brand-new manufacturing plant. The plant has an installation price of $15 million, which will certainly be depreciated straight-line come zero end its four-year life. If the plant has actually projected net income of $1,754,000, $1,820,500, $1,716,300, and $1,097,400 end these four years, what is the project’s average accounting return (AAR)?

Question 7. Calculating IRR A certain evaluates every one of its projects by applying the IRR rule. If the forced return is 14 percent, must the firm expropriate the following project?

YearCash Flow
0−$26,000
1 11,000
2 14,000
3 10,000

Question 8. Calculating NPV for the cash operation in the ahead problem, suppose the firm provides the NPV decision rule. In ~ a forced return of 11 percent, should the firm accept this project? What if the required return is 24 percent?

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Question 15. Calculating benefit Index What is the benefit index because that the following set of cash operation if the relevant discount rate is 10 percent? What if the discount rate is 15 percent? If that is 22 percent?

YearCash Flow
0−$15,300
1 9,400
2 7,600
3 4,300

Question 16.Problems through Profitability Index The Sloan corporation is trying come choose between the adhering to two mutually exclusive architecture projects:

YearCash flow (I)Cash flow (II)
0−$51,000−$14,400
1 24,800 7,800
2 24,800 7,800
3 24,800 7,800

1. If the required return is 10 percent and the firm applies the profitability table of contents decision rule, i beg your pardon project have to the certain accept?

2. If the firm applies the NPV decision rule, i beg your pardon project have to it take?

3. Describe why her answers in (a) and also (b) are different.

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Question 17. Comparing invest Criteria consider the adhering to two support exclusive projects:

YearCash circulation (A)Cash flow (B)
0−$455,000−$65,000
1 58,000 31,000
2 85,000 28,000
3 85,000 25,000
4 572,000 19,000

Whichever task you choose, if any, you need a return of 11 percent on your investment.

See more: Which Expression Is Equivalent To 100 N2 − 1? Which Expression Is Equivalent To 100 N2

1. If you apply the payback criterion, i beg your pardon investment will you choose? Why?

2. If you apply the discounted payback criterion, which investment will you choose? Why?

3. If you use the NPV criterion, i m sorry investment will you choose? Why?

4. If you apply the IRR criterion, i beg your pardon investment will you choose? Why?

5. If you use the profitability index criterion, i beg your pardon investment will certainly you choose? Why?

6. Based upon your answer in (a) through (e), which job will you finally choose? Why?

Question 19. MIRR RAK Corp. Is assessing a task with the complying with cash flows:

Year Cash Flow
0−$41,000
1 15,700
2 19,400
3 24,300
4 18,100
5 −9,400

The company uses one interest rate of 10 percent on all of its projects. Calculate the MIRR that the task using all three methods.

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