Question 1: Anderson Systems is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that if a project's expected NPV is negative, it should be rejected. WACC: 9.00%Year 0 1 2 3 Cash flows -$1,000 $500 $500 $500
A) $265.65
B) $278.93
C) $292.88
D) $307.52
E) $322.90
Question 2: Simms Corp. is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's IRR can be less than the WACC or negative, in both cases it will be rejected.Year 0 1 2 3 Cash flows -$1,000 $425 $425 $425
A) 12.55%
B) 13.21%
C) 13.87%
D) 14.56%
E) 15.29%
Question 3: Taggart Inc. is considering a project that has the following cash flow data. What is the project's payback? Year 0 1 2 3 Cash flows -$1,150 $500 $500 $500
A) 1.86 years
B) 2.07 years
C) 2.30 years
D) 2.53 years
E) 2.78 years
Question 4: As assistant to the CFO of Boulder Inc., you must estimate the Year 1 cash flow for a project with the following data. What is the Year 1 cash flow? Sales revenues $13,000 Depreciation $4,000 Other operating costs $6,000 Tax rate 35.0%
A) $5,950
B) $6,099
C) $6,251
D) $6,407
E) $6,568
Question 5: If an investment project would make use of land which the firm currently owns, the project should be charged with the opportunity cost of the land.
A) True
B) False
Question 6: Changes in net working capital should not be reflected in a capital budgeting cash flow analysis because capital budgeting relates to fixed assets, not working capital.
A) True
B) False