Initial Outlay Cash Flow in Period CFo CF₁ CF2 -20,000 7,730.85 The IRR is approximately: O 18%. O 20%. O 16%. O 14%. 7,730.85 CF3 7,730.85 CF4 7,730.85

Initial Outlay                            Cash Flow in Period                                            1                         2                      3                      4          $4,000,000            $1,546,170       $1,546,170     $1,546,170       $1,546,170 The Internal Rate of Return (IRR) =? A) 10%. B) 18%. C) 20%.      D) 24%.

ed ok O t 1 ht 0 ences For the given cash flows, suppose the firm uses the NPV decision rule. Cash Flow Year 0 123 a. NPV b. NPV -$ 150,000 a. At a required return of 10 percent, what is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. At a required re urn of 20 percent, what is the NPV of the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) 66,000 73,000 57,000

($ thousands) Present value at 19% Net cash flow Net present value 0 1 4 -13,700 -1,594 -13,700 -1,339 3,541 (sum of PVs). Period 2 3 6 3,057 6,433 10,644 10,095 5,867 2,159 3,817 5,308 4,230 2,066 5 7 3,379 1,000 Restate the above net cash flows in real terms. Discount the restated cash flows at a real discount rate. Assume a 19% nominal rate and 11% expected inflation. NPV should be unchanged at +3,541, or $3,541,000. Note: Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers in thousands rounded to the nearest whole number. Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Real Net Cash Flows NPV

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What is the modified internal rate of return for the following cashflow? CFO ($8,350,000) CF₁ 1 $4,200,000 i = 12% CF 2 $4,200,000 CF 3 ($2,850,000) CFA 4 $4,800,000 CF5 $3,400,000

Initial investment (CF) Year (t) 1 567GA WN 2 3 4 8 Machine A $85,300 $17,500 $17,500 $17,500 $17,500 $17,500 $17,500 $17,500 $17,500 Machine B $60,300 Cash inflows (CF₂) $11,500 $13,700 $15,600 $18,400 $20,300 $25,400 Machine C $130,300 $50,200 $30,300 $20,500 $20,100 $20,300 $29,900 $39,600 $49,900