Table 1: Project Data Project NPV (M$) Risk (%) Capital (M$) A 19 4 14 B 22 S 10 C 24 6 12 D 27 7 15 E 21 5 13 The budget constraint may be stated as: *A+c+2%p <= 0 14% +10x12x15xD -13%E43 14% -10%E-12x15xD -13%E43 %B5%E

ch A project with an initial investment of $88000 and a profitability index of 1.239 also has an internal rate of return of 12%. The present value of net cash flows is O $71025. O $98560. O $88000. O $109032. Save for Later O Et V B 21 E 7 Attempts: 0 of 1 used Submit Answer F12

arning X + tps://ng.cengage.com/static/nb/ui/evo/index.html?deploymentid=5933142288413647560152243&eISBN=97813379 CENGAGE | MINDTAP 11: Assignment - The Basics of Capital Budgeting Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Sigma) that will require an initial investment of $800,000. Blue Llama Mining Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the IRR method for capital budgeting decisions. The CFO says that the IRR is a better method because returns in percentage form are easier to understand and compare to required returns. Blue Llama Mining Company's WACC is 8%, and project Sigma has the same risk as the firm's average project. The project is expected to generate the following net cash flows: Year Year 1 Year 2 Year 3 Year 4 Cash Flow $350,000 $475,000 $425,000 $500,000 Which of the following is the correct calculation of project Sigma's IRR? 34.38% 38.20% 42.02% O 36.29%

onsider the following projects: Project Cash Flows ($) C0�0 C1�1 C2�2 C3�3 C4�4 C5�5 A −2,600 2,600 0 0 0 0 B −5,200 2,600 2,600 5,600 2,600 2,600 C −6,500 2,600 2,500 0 2,600 2,600 If the opportunity cost of capital is 10%, which project(s) have a positive NPV? Calculate the payback period for each project. Which project(s) would a firm using the payback rule accept if the cutoff period is three years?

A firm is considering the following independent projects.       Project         Investment    Present value offuture cash flows       NPV        A $130  $176 $46 B $103   $115 $12 C $183   $287 $104 D $161   $199 $38 E $184  $273  $89   What is the Profitability Index of Project B? Question 5Answer a. 0.85 b. 1.12 c. 0.89 d. 1.18

TB MC Qu.5-24 If the cash flows for Project Mare... If the cash flows for Project M are Co = -1,280 ; C₁ Multiple Choice 16.7 percent 14.7 percent 12.7 percent 10.7 percent = 270 ; C₂ = 770; and C3 = 768, calculate the IRR for the project.

ne NPV, with rankings Botany Bay, Inc., a maker of casual clothing, is considering four projects shown in the following table, Because of past financial difficulties, ptions the company has a high cost of capital at 14.4%. a. Calculate the NPV of each project, using a cost of capital of 14.4%. b. Rank acceptable projects by NPV. c. Calculate the IRR of each project and use it to determine the highest cost of capital at which all of the projects would be acceptable. a. Calculate the NPV of each project, using a cost of capital of 14.4%. The NPV of project A is $ (Round to the nearest cent.) Is project A acceptable? (Select the best answer below.) O A. No O B. Yes The NPV of project B is $ (Round to the nearest cent.) la nreinnt Danontabl-2/0lest the hant an nr hale Click to select your answer(s). P Type here to search

Consider the following two projects: Projec Year 0 Year 1 Year 2 Year 3 Year 4 Cash Cash Cash Cash Cash Discount Flow Flow Flow Flow Flow Rate A -100 40 50 60 N/A 0.11 -73 30 30 30 30 0.11 The net present value (NPV) of project As closest to Select one: a. 51.2 b. 25.6 O c. 20.5 Od. 22.5

11. IRR rule (S5.3) Consider the following two mutually exclusive projects: Cash flows ($) Project A B Co -50 -50 C₁ +60 0 C₂ +60 0 0 +140 Page 142 a. Calculate the NPV of each project for discount rates of 0%, 10%, and 20%. Plot these on a graph with NPV on the vertical axis and discount rate on the horizontal axis. b. What is the approximate IRR for each project? c. In what circumstances should the company accept project A? d. Calculate the NPV of the incremental investment (B – A) for discount rates of 0%, 10%, and 20%. Plot these on your graph. Show that the circumstances in which you would accept A are also those in which the IRR on the incremental investment is less than the opportunity cost of capital.

TB MC Qu. 13-01 A project has the following projected outcomes in... A project has the following projected outcomes in dollars: $240, $330, and $590. The probabilities of their outcomes are 30%, 45%, and 25% respectively. What is the expected value of these outcomes? Multiple Choice O O $353.00 $368.00 $413.00 $383.00