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# Problem - Washington State University Finance 325 Practice...

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Washington State University Finance 325 1 Practice Problems 1. What is the net present value of a project with the following cash flows and a required return of 12 percent? Year Cash Flow 0 -\$28,900 1 \$12,450 2 \$19,630 3 \$ 2,750 2. What is the net present value of a project that has an initial cash outflow of \$12,670 and the following cash inflows? The required return is 11.5 percent. Year Cash Inflows 1 \$4,375 2 \$ 0 3 \$8,750 4 \$4,100 3. A project will produce cash inflows of \$1,750 a year for four years. The project initially costs \$10,600 to get started. In year five, the project will be closed and as a result should produce a cash inflow of \$8,500. What is the net present value of this project if the required rate of return is 13.75 percent? 4. You are considering the following two mutually exclusive projects. The required rate of return is 11.25 percent for project A and 10.75 percent for project B. Which project should you accept and why? Year Project A Project B 0 -\$48,000 -\$126,900 1 \$18,400 \$ 69,700 2 \$31,300 \$ 80,900 3 \$11,700 \$ 0 5. You are considering two mutually exclusive projects with the following cash flows.

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Problem - Washington State University Finance 325 Practice...

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