Requirement 1. What is the NPV of each project? Assume neither project has a residual value. Round to two decimal places. (Enter any factor amounts to three decimal place parentheses or a minus sign for a negative net present value.) Caclulate the NPV (net present value) of each project. Begin by calculating the NPV of Project A. Project A: Years 1-7 Present value of annuity 0 Investment Net present value of Project A Calculate the NPV of Project B. Project B: Years 1-9 0 Present value of annuity Investment Net present value of Project B Net Cash Inflow Net Cash Inflow Annuity PV Factor (i=12%, n=7) Annuity PV Factor (i=10%, n=9) Present Value Present Value

Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.)  Project A             Time: 0 1 2 3 4 5 Cash flow: −$1,400 $510 $600 $600 $380 $180 Payback years: _______.__

NPV and IRR Analysis Cummings Products Company is considering two mutually exclusive investments whose expected net cash flows are as follows: EXPECTED NET CASH FLOWS Year Project A Project B -$340 -$630 -528 210 -219 210 3. -150 210 4. 1,100 210 820 210 6. 990 210 7. -325 210 a. Construct NPV profiles for Projects A and B. Select the correct graph. VPVS) 1400 VPVS) VPVS) 1400 1400 1200 1200 1200+ 1000 1000 1000 800 Project B 800 Pioject A 800+ C1

When calculating the annual rate of return, the average investment is equal to initial investment divided by life of project. (initial investment plus $0) divided by 2. (initial investment plus salvage value) divided by 2. initial investment divided by 2.

Compute the net present value for each project. (Round answers to 0 decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided.)     Project Bono   Project Edge   Project Clayton   Net present value   $enter a dollar amount rounded to 0 decimal places    $enter a dollar amount rounded to 0 decimal places    $enter a dollar amount rounded to 0 decimal places          Save for Later

Calculate the NPVs of both Project X and Project Y.  Show the NPVs for each project.  If the Projects are Independent which would you approve?  If the Projects are Mutually Exclusive which would you approve?

1. What is the project’s net present value? 2. What is the project’s internal rate of return to the nearest whole percent? 3. What is the project’s simple rate of return?

a) b) Consider the following two projects: Project A B Year 0 Cash Flow -100 -73 17.3% C. d. Year 1 Cash Flow 40 30 a. 30 percent. b. 20 percent. 0 percent. 10 percent. Year 2 Cash Flow What is the incremental IRR of Project B over Project A? a. 12.6% b. 23.3% C. 1.7% d. 50 30 Year 3 Cash Flow 60 30 Year 4 Cash Flow N/A 30 Discount Rate If the standard deviation of returns on the market is 20 percent, and the beta of a well- diversified portfolio is 1.5, calculate the standard deviation of this portfolio. .15 .15

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Find internal rate of return of a project with an initial cost of $43,000, expected net cash inflows of $9,550 per year for 8 years, and a cost of capital of 10.50%.Round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72. Group of answer choices 15.05% 14.60% 14.90% 16.24% 17.73%