RiverRocks, Inc., is considering a project with the following projected free cash flows: Year 0 2 Cash Flow (in millions) - $50.3 $19.1 The timeline for the project's cash flows is: (Select the best choice below.) O A. Cash Flows (millions) $50.3 Year OB. Cash Flows (millions) $50.3 The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. River Rocks' WACC is 12.1%. Should it take on this project? Why or why not? Year OC. Cash Flows (millions) -$50.3 Year 0 OD. Cash Flows (millions) - $50.3 Year -$10.5 1 $10.5 1 $10.5 -$10.5 $10.5 - $19.1 2 $19.1 2 -$19.1 2 $19.1 2 - $20.6 3 $20.6 - $20.6 3 3 $20.6 $20.6 -$15.7 $15.7 - $15.7 4 $15.7 $15.7

Barry Company 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: Year Cash flows a. $34.27 b. $39.24 c. -$284.96 d. $222.55 e. $390.72 14.50% 0 -$1,225 1 $390 2 $380 3 $370 4 $360 $350

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 11 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3.0 and 3.5 years, respectively. Time: Cash flow: 0 1 2 -$241,000 $66,400 $84,600 Payback Use the payback decision rule to evaluate this project. Note: Round your answer to 2 decimal places. years 4 3 $141,600 $122,600 Should the project be accepted or rejected? (Click to select) 5 $81,800

RiverRocks, Inc., is considering a project with the following projected free cash flows: Year 0 Cash Flow - $50.8 (in millions) O A. Cash Flows (millions) - $50.8 The timeline for the project's cash flows is: (Select the best choice below.) Year B. Cash Flows (millions) The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. RiverRocks' WACC is 12.8%. Should it take on this project? Why or why not? Year O C. Cash Flows (millions) Year D. Cash Flows (millions) Year 0 - $50.8 0 $50.8 0 $50.8 0 - $10.8 + 1 $10.8 1 - $10.8 1 1 $10.8 $10.8 1 - $20.7 2 $20.7 2 - $20.7 2 2 $20.7 $20.7 2 - $19.5 3 $19.5 + 3 - $19.5 3 $19.5 3 $19.5 3 - $15.4 4 $15.4 4 - $15.4 4 $15.4 4 $15.4 4

A project has the following cash flows: Year 0: 74000 Year 1: -49000 Year 2:  -41000 What is the IRR for this project? If the required return is 12%, should the firm accept the project? What is the NPV of this project? What is the NPV of the project if the required return is 0%? 24%? What is going on here? Explain your answer

A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year Cash Flow 0 -$27,400 1 11,400 23 3 14,400 10,400 If the required return is 16 percent, what is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) IRR % Should the firm accept the project? ○ Yes ○ No

FB Company is considering investing in two construction projects, and he developed the following estimates of the cash flows. His required return is 10% and views these projects as equally risky. Year     Project 1 cash flow       project 2 cash flow 0           -550000                        -700000 1           150000                         200000 2           200000                        150000 3           150000                        250000 4            150000                     150000 5            100000                    150000   Required: a)  Calculate the net present value (NPV) of each project, assess its acceptability, and indicate which project is best using NPV. b)  Calculate the profitability index (PI) of each project, assess its acceptability, and indicate which project is best using PI. c)  If both the projects have recorded a positive NPV value and the projects are mutually exclusive, which projects would you recommend for FB Company to undertake? Why?

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Time: 0 1 2 3 4 5 6 Cash flow: -$4,900 $1,260 $2,460 $1,660 $1,660 $ 1,460 $1,260 Use the NPV decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 12 percent, and that the maximum allowable payback and discounted payback statistics for your company are 2.5 and 3.0 years, respectively. Time: 0 1 2 3 4 5 Cash flow -$228,000 $65, 100 $83,300 $140, 300 $121,300 $80, 500 Use the discounted payback decision rule to evaluate this project. (Do not round intermediate…

Warr Company 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 or negative, in both cases it will be rejected. Year 0 1 2 3 4 5 CF -1,415 400 400 400 400 400 Need to know how to compute using CF function on calculator.

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 9 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Time: Cash flow: 0 -$15, 200 MIRR 1 $3,000 3 2 $4,200 $3,400 Use the MIRR decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) % 5 $3,400 $3,200 6 $3,000