Assignment
QUESTION 1
Orange Inc. is currently considering a project that will produce cash inflows of $9,000 a year for two years followed by $6,500 a year for three more years. The cost of the project is $18,000. What is the profitability index if the discount rate is 13 percent?
1.50
1.81
1.71
1.66
QUESTION 2
You are considering an investment project with the cash flows of -500 (the initial cash flow), 650 (cash flow at year 1), -100 (cash flow at year 2). Given the discount rate of 10%, compute the Modified Internal Rate of Return (MIRR) using the combination approach.
11.56%
11.21%
10.78%
10.91%
QUESTION 3
While evaluating alternatives, all of the following are appropriate questions you could ask before making a major purchase except
Is it possible to delay the purchase or to do without the item?
Should I pay for the item with cash or buy it on credit?
Which brands should I consider?
How do the price, quality, and service compare at different stores?
All of these are questions that should be asked.
Read the article and provide a good summary in one paragraph. A good summary is written in your own words (not a cut and paste), and covers all the important points and should not include side points.