Question 1. Blanchford Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected.
WACC = 10%
Year: 0 1 2 3 4
Cash flows: -$1,000 $475 $475 $475 $475
- $482.16
- $496.38
- $505.69
- $519.05
- $524.72
Question 2. Tapley Dental Associates is considering a project that has the following cash flow data. What is the project's payback?
Year: 0 1 2 3 4 5
Cash flows: -$1,000 $300 $310 $320 $330 $340
- 2.11 years
- 2.50 years
- 2.71 years
- 3.05 years
- 3.21 years
Question 3. Ryngaert Medical Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected.
WACC = 10%
Year: 0 1 2 3 4
Cash flows: -$1,000 $400 $405 $410 $415
- $241.24
- $255.83
- $268.54
- $274.78
- $289.84
Question 4. Rockmont Recreation Inc. is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC (and even negative), in which case it will be rejected.
Year: 0 1 2 3 4
Cash flows: -$1,000 $250 $230 $210 $190
- -5.15%
- -3.44%
- -1.17%
- 2.25%
- 3.72%
Question 5. As a member of Gamma Corporation's financial staff, you must estimate the Year 1 operating net cash flow for a proposed project with the following data. What is the Year 1 operating cash flow?
Sales $33,000
Depreciation $10,000
Other operating costs $17,000
Interest expense $4,000
Tax rate 35%
- $ 9,500
- $10,600
- $11,700
- $12,800
- $13,900