16. To the nearest dollar, what is the net present value of a replacement project whose cash flows are -$104,000; $34,444; $39,877; $25,000; and $52,800 for years 0 through 4, respectively? The firm has decided to assume that the appropriate cost of capital is 10% and the appropriate risk-free rate is 6%.

17. A project has the following cash inflows $34,444; $39,877; $25,000; and $52,800 for years 1 through 4, respectively. The initial cash outflow is $104,000. Which of the following four statements is correct concerning the project internal rate of return (IRR)?

18. You must decide between two mutually exclusive projects. Project A has cash flows of -$10,000; $5,000; $5,000; and $5,000; for years 0 through 3, respectively. Project B has cash flows of -$20,000; $10,000; $10,000; and $10,000; for years 0 through 3, respectively. The firm has decided to assume that the appropriate cost of capital is 10% for both projects. Which project should be chosen? Why?

19. There are two mutually exclusive projects that have different lives. Project A has a 4-year life and Project B has a 5-year life. In replacement chain analysis, the earliest common life will occur when Project A is replicated __________ times and Project B is replicated __________ times.

20. A project whose acceptance requires the acceptance of one or more alternative projects is referred to as __________.

21. Utilize the following NPV sensitivity analysis table to answer the question below:

Variable changePSVPP-10% -20 28 36 -5% 3 29 33 Base 30 30 30 5% 61 31 27 10% 103 32 24 NPV is most sensitive to a change in which of the three input variables -- product price (P), salvage value (SV), or purchase price of the asset (PP)?

CAPITULO 13 TRUE OR FALSE 1. For a typical project, increasing the discount rate decreases the project's value.

2. The net present value of a project generally increases as the required rate of return decreases.