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HW8.docx

# HW8.docx - Question 1 3 out of 3 points Use the following...

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Question 1 3 out of 3 points Use the following information for this and the next question. Suppose a project costs \$1,000 and produces cash flows of \$200 over each of the next three years and a cash flow of \$250 for each of the years four to six. What is the IRR of the project? Selected Answer: 8.8 % Question 2 3 out of 3 points What is the NPV of the project at 8 percent required rate of return? Selected Answer: \$2 7 Question 3 3 out of 3 points The following information is for this and the following two questions. Ames and Lowell, LLC has two mutually exclusive projects available. The cash flows from these projects are shown below. Year Project A Project B 0 -\$25,000 -\$25,000 1 \$12,000 \$8,000 2 \$11,000 \$8,000 3 \$9,000 \$8,000 4 \$6,000 \$10,000 5 -\$2,000 \$6,000 What is the IRR of Project A and Project B, respectively? Selected Answer: 19.84% and 18.31% Question 4 3 out of 3 points If the required rate of return is 12%, what is the NPV of Project A and

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Project B, respectively? Selected Answer: \$3,568 and \$3,974 Question 5 3 out of 3 points What is the crossover rate between Project A and Project B?
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• Fall '15
• Yash R. Puri
• Net Present Value, English-language films, Internal rate of return

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