This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
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 projects NPV? 11-2 IRR: Refer to Problem 11-1. What is the projects IRR? 11-3 MIRR: Refer to Problem 11-1. What is the projects MIRR? 11-4 PAYBACK PERIOD: Refer to Problem 11-1. What is the projects payback? 11-5 DISCOUNTED PAYBACK: Refer to Problem 11-1. What is the projects 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:...
View Full Document
- Spring '11