Consider the following cash flows: Year Project A Project B ($200,000 0 ) ($95,000) 1 $100,000 $20,000 23456 $125,000 $27,000 $55,000 $26,000 $25,000 5 6 $24,000 $23,000 Question 1: Find the NPV of each project at 9% discount rate using replacement chain analysis and comment on each of the project.

A project has the following cash flows set out below. What is the profitability index of this project if the relevant discount rate is 2 percent? Enter your final answer to two decimal places. Year Cash flow 0 -1,745 1 537 2 2,066 3 3,912

The following table contains the estimated cash flows of a project. Assume the appropriate discount rate (hurdle rate) is 14%. Answer the following questions: Year Operating Cash Flow 0 -$20,000 1 $7,000 2 $8,000 3 $9,000 4 $4,000   b. What is the NPV of project 1?

The following table contains the estimated cash flows of a project. Assume the appropriate discount rate (hurdle rate) is 14%. Answer the following questions: Year Operating Cash Flow 0 -$20,000 1 $7,000 2 $8,000 3 $9,000 4 $4,000   c. What is the IRR of project 1?

Calculate the payback period, the discounted payback period and the NPV for the following project using a rate of 5%.                                                                                                                     Time                    Cash Flow                        0  - $63,000        $ 21,000 $ 21,000 $ 21,000 $ 21,000   Payback =                                                                   Discounted Payback =

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Most Company has an opportunity to invest in one of two new projects. Project Y requires a $350,000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $350,000 investment for new machinery with a three-year life and no salvage value. The two projects yield the following predicted annual results. The company uses straight-line depreciation, and cash flows occur evenly throughout each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project Y Project z $350,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses $280,000 49,000 70,000 126,000 25,000 270,000 80,000 24,000 35,000 42,000 126,000 25,000 228,000 52,000 15,600 Pretax income Income taxes (30%) Net income $56,000 $ 36,400

Calculate the payback period, the discounted payback period and the NPV for the following project using a rate of 5%.                                                                                                          Time            Cash Flow                 0  - $53,000    1                                        $  21,000 2                                        $  21,000 3                                        $  21,000   NPV =   Payback =                                                               Discounted Payback =

Calculate/estimate the IRR(s) for a 6-year project with the following cash flows: CF0 = -50, CF1 =28 = CF2 = CF3 = CF4 = CF5, and CF6 = -93. In Excel, plot the NPV (= Y axis) against r (= discountrate), using r = 0%, 2%, and so on until you find all IRRs in the chart. Identify/estimate all IRRs.

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