Chapter 11 Homework

Chapter 11 Homework - Chapter 11 Homework 11-1 NPV Project...

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Unformatted text preview: Chapter 11 Homework 11-1 NPV: Project K costs $52,125, its expected net cash inflows are $12,000 per year for 8 years, and its WACC is 12%. What is the project’s NPV? 11-2 IRR: Refer to Problem 11-1. What is the project’s IRR? 11-3 MIRR: Refer to Problem 11-1. What is the project’s MIRR? 11-4 PAYBACK PERIOD: Refer to Problem 11-1. What is the project’s payback? 11-5 DISCOUNTED PAYBACK: Refer to Problem 11-1. What is the project’s discounted payback? 11-6 NPV: Your division is considering two projects with the following net cash inflows (in millions): 1 2 3 | | | | Project A -$25 $5 $10 $17 Project B -$20 $10 $9 $6 a. What are the projects’ NPVs assuming the WACC is 5%? 10%? 15%? b. What are the projects’ IRRs at each of these WACCs? c. If the WACC was 5% and A and B were mutually exclusive, which project would you choose? What is the WACC was 10%? 15%? (Hint: The crossover rate is 7.81%) 11-10 CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS:...
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Chapter 11 Homework - Chapter 11 Homework 11-1 NPV Project...

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