# Q7 - 8,000.00 \$ 3,202.97 25.71 \$ FIN 301 Winter Quiz Seven...

This preview shows pages 1–2. Sign up to view the full content.

FIN 301 Winter 2011-02-17 Quiz Seven – Version A (150 points possible) NAME _________________________________________________________________ Calculator Model _________________________________________________________ Consider the following series of cash flows: Date Cash Flow 1/1/2000 \$(14,500.00 ) 12/31/2000 \$ 5,000.00 12/31/2001 \$ 6,000.00 12/31/2002 \$ 7,000.00 12/31/2003 \$ 8,000.00 1. What is the Internal Rate of Return (IRR)? Enter the cash flows into your financial calculator and solve for IRR. IRR = 25.71% 2. What is the 2-second audit test to verify that the IRR you calculated is correct? Provide a detailed description of the test or perform it. Check that the NPV at 25.71% is approximately \$0.00. Date Cash Flow PV 1/1/2000 \$(14,500.00 ) \$(14,500.00 ) 12/31/2000 \$ 5,000.00 \$ 3,977.28 12/31/2001 \$ 6,000.00 \$ 3,796.49 12/31/2002 \$ 7,000.00 \$ 3,523.26 12/31/2003 \$

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 8,000.00 \$ 3,202.97 25.71% \$ - FIN 301 Winter 2011-02-17 Quiz Seven – Version B (100 points possible) NAME _________________________________________________________________ Calculator Model _________________________________________________________ Consider the following series of cash flows: Date Cash Flow 1/1/2000 \$(14,500.00 ) 12/31/2000 \$ 5,000.00 12/31/2001 \$ 6,000.00 12/31/2002 \$ 7,000.00 12/31/2003 \$ 8,000.00 1. What is the Net Present Value (NPV) of the series of cash flows at 10%? Date Cash Flow PV 1/1/2000 \$(14,500.00 ) \$(14,500.00 ) 12/31/2000 \$ 5,000.00 \$ 4,545.45 12/31/2001 \$ 6,000.00 \$ 4,958.68 12/31/2002 \$ 7,000.00 \$ 5,259.20 12/31/2003 \$ 8,000.00 \$ 5,464.11 10.00% \$ 5,727.44 2. Would you accept the project associated with these cash flows? WHY or WHY NOT? Yes. NPV is greater than or equal to \$0.00....
View Full Document

{[ snackBarMessage ]}

### Page1 / 2

Q7 - 8,000.00 \$ 3,202.97 25.71 \$ FIN 301 Winter Quiz Seven...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online