Managerial Finance
1. Find the payback period for a project that requires investment of $48 and returns $14 every years for 7 years.
2. Given the following cashflows calculate NPV.
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WACC: |
10.00% |
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Year |
0 |
1 |
2 |
3 |
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Cash flows |
?$1,050 |
$450 |
$460 |
$470 |
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. 3. Given the following cashflows calculate payback period.
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4. Calculate the payback period for a project that requires investment of $5,400 and will provide the cashflows of $1,200, $400, $700, $3,000 and $500 in years 1 thru 5 respectively.
5. Calculate the NPV of a project that requires investment of 681 and provides the cashflows of 390, 318, 316, 364 in the next 4 years. The relevant discount rate is 14%. (All numbers are in dollars).
6. IRR has the following drawbacks. Check all that apply. No credit if you miss or wrongly check any option.
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IRR assumes that intermediate cashflows from a project are invested at IRR |
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IRR may lead you to a wrong decision if you are deciding between mutually exclusive projects. |
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You may get a negative IRR |
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For a project with conventional cashflows you may decide to take a project based on IRR when NPV would have led you to reject the project. |
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There may be several IRRs if the cashflows are unconventional |
7.
A project has the following cashflow. Calculate NPV.
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WACC: |
9.00% |
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Year |
0 |
1 |
2 |
3 |
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Cash flows |
?$1,000 |
$500 |
$500 |
$500 |
8. A project has the following cash flow. What is the project's NPV?
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Discount rate: |
11.00% |
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Year |
0 |
1 |
2 |
3 |
4 |
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Cash flows |
?$1,000 |
$350 |
$350 |
$350 |
$350 |
9. A project has following cashflow. Calculate NPV
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WACC: |
10.25% |
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Year |
0 |
1 |
2 |
3 |
4 |
5 |
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Cash flows |
?$1,000 |
$300 |
$300 |
$300 |
$300 |
$300 |
10. Calculate the project's IRR.
Do not write the '%' sign in your answer. If the answer is 12.45%, you will enter 12.45
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Year |
0 |
1 |
2 |
3 |
4 |
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Cash flows |
?$1,050 |
$400 |
$400 |
$400 |
$400 |
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Solution: Managerial Finance
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