1. Before settling on a final short-term financial plan, the manager needs to ask several questions. Which is the odd man out?
Does the plan yield satisfactory financial ratios?
Would the firm do better to arrange long-term financing to cover any cash shortage?
Has the firm estimated its EVA correctly?
Does the company need a larger reserve of cash or marketable securities to cover emergencies?
2. Strange Manufacturing company is purchasing a production facility at a cost of $21 million. The firm expects the project to generate annual cash flow of $7 million over the next five years. Its cost of capital is 18% What is the internal rate of return on this project.