Multiple Choice Question 56
Net present value: The Cyclone Golf Resorts is redoing its golf course at a cost of $2,744,320. It expects to generate cash flows of $1, 223,445, $2,007,812, and $3,147,890 over the next three years. If the appropriate discount rate for the firm is 13 percent, what is the NPV of this project?
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$4,836,752
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$2,092,432
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$3,112,459
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$7,581,072
Multiple Choice Question 58
Net present value: Cortez Art Gallery is adding to its existing buildings at a cost of $2 million. The gallery expects to bring in additional cash flows of $520,000, $700,000, and $1,000,000 over the next three years. Given a required rate of return of 10 percent, what is the NPV of this project?
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$197,446
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$1,802,554
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-$1,802,554
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-$197,446
Multiple Choice Question 62
Payback: Elmer Sporting Goods is getting ready to produce a new line of gold clubs by investing $1.85 million. The investment will result in additional cash flows of $525,000, $812,500, and 1,200,000 over the next three years. What is the payback period for this project?
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3 years
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More than 3 years
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2.43 years
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1.57 years
Multiple Choice Question 71
Internal rate of return: Quick Sale Real Estate Company is planning to invest in a new development. The cost of the project will be $23 million and is expected to generate cash flows of $14,000,000, $11,750,000, and $6,350,000 over the next three years. The company’s cost of capital is 20 percent. What is the internal rate of return on this project? (Round to the nearest percent.) 21.57177%
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22%
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20%
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28%
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24%
Problem 10.42
An investment of $89 generates after-tax cash flows of $47 in Year 1, $71 in Year 2, and $138 in Year 3. The required rate of return is 20 percent. The net present value is closest to
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$57.41.
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$79.33.
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$36.37.
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$54.37.
Problem 10.40
Given the following cash flows for a capital project, calculate the NPV and IRR. The required rate of return is 8 percent.
Year
0
1
2
3
4
5
Cash Flows
$-49740
$14540
$15075
$20404
$10577
$5497
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NPV=4360. IRR=12.84%
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NPV=3289. IRR=12.84%
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NPV=3289. IRR=11.66%
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NPV=4360. IRR=11.66%
