FIN_3716_Quiz_5

FIN_3716_Quiz_5 - FIN 3716 Quiz #5 Use the following...

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FIN 3716 Quiz #5 Use the following information to answer questions 1 through 4. You are analyzing a proposed project and have compiled the following information: Year Cash flow 0 -$228,000 Required payback period 3 years 1 $ 56,500 Required return 9 percent 2 $ 99,700 3 $115,000 1. What is the net present value of the proposed project? a. -$3,448.54 b. -$3,163.80 c. $6,163.80 d. $15,377.15 2. What is the discounted payback period? a. never b. 2.37 years c. 3.04 years d. 3.37 years 3. Should the project be accepted based on the internal rate of return (IRR)? Why or why not? a. no; The project IRR is greater than the required return. b. no; The project IRR is less than the required return. c. yes; The project IRR is greater than the required return. d. yes; The project IRR is equal to zero. 4. Should the proposed project be accepted based on the payback period? Why or why not? a. yes; The payback period is greater than the required payback period.
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This note was uploaded on 12/14/2010 for the course FIN 3716 taught by Professor Fang during the Fall '10 term at LSU.

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FIN_3716_Quiz_5 - FIN 3716 Quiz #5 Use the following...

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