Problem on cash flow and wacc data


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

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

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

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%

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

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Finance Basics: Problem on cash flow and wacc data
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