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financequiz8

# financequiz8 - 1 Question 1 Blanchford Enterprises is...

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1. Question: 1. Blanchford Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected. WACC = 10% Year: 0 1 2 3 4 Cash flows: -\$1,000 \$475 \$475 \$475 \$475

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Your Answer: \$482. 16 \$496. 38 \$505. 69 C ORR ECT \$519. 05 \$524. 72
Instructor Explanatio n: NPV (constant cash flows; 4 years) NPV = -1,000 + 475 / 1.10 + 475 / 1.10 2 + 475 / 1.10 3 + 475 / 1.10 4 NPV = 505.69 Points Received: 4 of 4 Comments : 2. Question: Tapley Dental Associates is considering a project that has the following cash flow data. What is the project's payback? Year: 0 1 2 3 4 5 Cash flows: -\$1,000 \$300 \$310 \$320 \$330 \$340

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Your Answer: 2.11 year s 2.50 year s 2.71 year s 3.05 year s 3.21 year s C ORR ECT
Instructor Explanatio n: Payback period = \$300 + \$310 + \$320 + (\$70 / \$330) = 3.21 years Points Received: 4 of 4 Comments : 3. Question: Ryngaert Medical Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected. WACC = 10% Year: 0 1 2 3 4 Cash flows: -\$1,000 \$400 \$405 \$410 \$415

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Your Answer: \$241 .24 \$255 .83 \$268 .54 \$274 .78 \$289 .84 C ORR ECT
Instructor Explanatio n: NPV = -1,000 + 400 / 1.10 + 405 / 1.10 2 + 410 / 1.10 3 + 415 / 1.10 4 NPV = 289.84 Points Received: 4 of 4 Comments : 4. Question: Rockmont Recreation Inc. is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC (and even negative), in which case it will be rejected.

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financequiz8 - 1 Question 1 Blanchford Enterprises is...

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