Project A Project B Project C Project D Project E
Today (20,000) (30,000) (7,500) (4,000) (6,000)
Year 1 10,000 6,000 2,000 2,000 750
Year 2 6,000 8,000 3,000 2,500 1,500
Year 3 4,000 10,000 4,000 3,000 2,250
Year 4 2,000 8,000 2,500 3,000
Year 5 1,000 6,000 2,000 3,750
Year 6 500 4,000 (8,000) 4,000
1. What is the payback period of project E?
a) 3 year
b) 3.5 years
c) 4.25 years
d) 5 years
2. What is the crossover rate between projects A and B?
a) 8.4%
b) 11.2%
c) 13.6%
d) There are multiple crossover rates
3. What is the NPV of project D if the cost of capital is 6%?
a) -34 b) 272 c) 466 d) 652
4. If A and C are repeatable, mutually exclusive projects, then which one is better if the
WACC is 8%?
a) Project A b) Project C