Chp 9 Finance Quiz 2

Chp 9 Finance Quiz 2 - Question 1 1. A project has a...

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1. A project has a required payback period of three years. Which one of the following statements is correct concerning the payback analysis of this project? Answer The cash flows in each of the three years must exceed one-third of the project's initial cost if the project is to be accepted. The cash flow in year three is ignored. The project's cash flow in year three is discounted by a factor of (1 + R) 3 . The cash flow in year two is valued just as highly as the cash flow in year one. The project is acceptable whenever the payback period exceeds three years. 0.1 points Question 2 1. It will cost \$6,000 to acquire an ice cream cart. Cart sales are expected to be \$3,600 a year for three years. After the three years, the cart is expected to be worthless as the expected life of the refrigeration unit is only three years. What is the payback period? Answer 1.48 years 1.67 years 1.82 years 1.95 years 2.00 years 0.1 points Question 3 1. The Taxi Co. is evaluating a project with the following cash flows: CF0= -100, CF1=150, CF2= -38.6 The company uses a 10 percent interest rate on all of its projects. What is the MIRR using the discounted approach? Answer

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This note was uploaded on 07/31/2011 for the course FIN 550 taught by Professor Rajneeshsharma during the Summer '11 term at Saint Joseph's University.

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Chp 9 Finance Quiz 2 - Question 1 1. A project has a...

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