1.Compute the NPV statistic for Project Y and note whether the firm should accep
ID: 2710862 • Letter: 1
Question
1.Compute the NPV statistic for Project Y and note whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 12 percent. (2 points)
Project Y
Time
0
1
2
3
4
Cash Flow
-$9,000
$3,500
$4,300
$1,550
$900
2.Compute the NPV statistic for Project K and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is six percent. (3 points)
Project K
Time
0
1
2
3
4
5
Cash Flow
-$10,000
$5,000
$-6,000
$6,000
$7,000
$10,000
3.Compute the payback statistic for Project A and recommend whether the firm should accept or reject the project with the cash flows, shown below if the appropriate cost of capital is eight percent and the maximum allowable payback is four years. (2 points)
Project A
Time
0
1
2
3
4
5
Cash Flow
-$1,000
$350
$480
$520
$300
$100
4.Compute the discounted payback statistic for Project D and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 12 percent and the maximum allowable discounted payback is four years. (4 points)
Project D
Time
0
1
2
3
4
5
Cash Flow
-$11,000
$3,350
$4,180
$1,520
$0
$1,000
5.Compute the IRR statistic for project F and note whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 12 percent. (3 points)
Project F
Time
0
1
2
3
4
Cash Flow
-$11,000
$3,350
$4,180
$1,520
$2,000
6.Compute the MIRR statistic for Project I and tell whether to accept or reject the project with the cash flows shown below if the appropriate cost of capital is 12 percent. (6 points)
Project I
Time
0
1
2
3
4
Cash Flow
-$11,000
$5,330
$4,180
$1,520
$2,000
Time
0
1
2
3
4
Cash Flow
-$9,000
$3,500
$4,300
$1,550
$900
Explanation / Answer
1 Discount rate 12% Year 0 1 2 3 4 CF -9000 3500 4300 1550 900 DCF -9000 3125 3427.934 1103.259 571.9663 NPV -771.841 Reject 2 Discount rate 6% Year 0 1 2 3 4 5 CF -10000 5000 -6000 6000 7000 10000 DCF -10000 4716.981 -5339.98 5037.716 5544.656 7472.582 NPV 7431.956 Accept 3 Discount rate 8% Year 0 1 2 3 4 5 CF -1000 350 480 520 300 100 DCF -1000 324.0741 411.5226 412.7928 220.509 68.05832 Payback 2.293271 Accept 4 Discount rate 12% Year 0 1 2 3 4 5 CF -11000 3350 4180 1520 0 1000 DCF -11000 2991.071 3332.27 1081.906 0 567.4269 Discounted Payback >5 Reject 5 Discount rate 12% Year 0 1 2 3 4 CF -11000 3350 4180 1520 2000 DCF -11000 2991.071 3332.27 1081.906 1271.036 IRR -11% Reject 6 Discount rate 12% Year 0 1 2 3 4 CF -11000 3350 4180 1520 2000 FV -11000 4706.509 5243.392 1702.4 2000 MIRR 11% Accept
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