FINC Ch 10 Quiz - A firm is evaluating a proposal which has an initial investment of $35,000 and has cash flows of $10,000 in year 1 $20,000 in year 2

FINC Ch 10 Quiz - A firm is evaluating a proposal which has...

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A firm is evaluating a proposal which has an initial investment of $35,000 and has cash flows of $10,000 in year 1, $20,000 in year 2, and $10,000 in year 3. The payback period of the project is ________. What is the NPV for a project whose cost of capital is 15 percent and initial after-tax cost is $5,000,000 and is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $1,700,000 in year 3, and $1,300,000 in year 4? A firm is evaluating two independent projects utilizing the internal rate of return technique. Project X has an initial investment of $80,000 and cash inflows at the end of each of the next five years of $25,000. Project Z has an initial investment of $120,000 and cash inflows at the end of each of the next four years of $40,000. The firm should ________. ________ is the process of evaluating and selecting long-term investments that are consistent with a firm's goal of maximizing owners' wealth. Independent projects are projects that compete with one another for a firm's resources, so that the acceptance of one eliminates the others from further consideration. False What is the NPV for a project if its cost of capital is 12 percent and its initial after-tax cost is $5,000,000 and it is expected to provide after-tax operating cash flows of $1,800,000 in year 1, $1,900,000 in year 2, $1,700,000 in year 3, and ($1,300,000) in year 4? -$1,494,336 What is the IRR for the following project if its initial after-tax cost is $5,000,000 and it is expected to provide after-tax operating cash flows of $1,800,000 in year 1, $1,900,000 in year 2,$1,700,000 in year 3, and $1,300,000 in year 4? 13.6% If a project's IRR is greater than 0 percent, the project should be accepted. False The final step in the capital budgeting process is ________. follow-up Projects that compete with one another, so that the acceptance of one eliminates the others from further consideration are called ________. mutually exclusive projects

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