BUSINESS

61.Last month, Lloyd’s Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm’s WACC. The Fed’s action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project’s forecasted NPV? Note that a project’s projected NPV can be negative, in which case it should be rejected.

Old WACC:

10.00%

 

New WACC:

12.50%

Year

0

1

2

3

Cash flows

-$1,000

$410

$410

$410

62.Lasik Vision Inc. recently analyzed the project whose cash flows are shown below. However, before Lasik decided to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm’s WACC. The Fed’s action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project’s forecasted NPV? Note that a project’s projected NPV can be negative, in which case it should be rejected.

Old WACC:

8.00%

 

New WACC:

8.50%

Year

0

1

2

3

Cash flows

-$1,000

$410

$410

$410

63.Ehrmann Data Systems is considering a project that has the following cash flow and WACC data. What is the project’s MIRR? Note that a project’s projected MIRR can be less than the WACC (and even negative), in which case it will be rejected.

WACC:

8.75%

 

 

 

Year

0

1

2

3

Cash flows

-$1,000

$450

$450

$450

 

64.Ingram Electric Products is considering a project that has the following cash flow and WACC data. What is the project’s MIRR? Note that a project’s projected MIRR can be less than the WACC (and even negative), in which case it will be rejected.

WACC:

14.75%

 

 

 

Year

0

1

2

3

Cash flows

-$800

$350

$350

$350

65.Malholtra Inc. is considering a project that has the following cash flow and WACC data. What is the project’s MIRR? Note that a project’s projected MIRR can be less than the WACC (and even negative), in which case it will be rejected.

WACC:

10.00%

 

 

 

 

Year

0

1

2

3

4

Cash flows

-$1,175

$300

$320

$340

$360

66.Hindelang Inc. is considering a project that has the following cash flow and WACC data. What is the project’s MIRR? Note that a project’s projected MIRR can be less than the WACC (and even negative), in which case it will be rejected.

WACC:

13.25%

 

 

 

 

Year

0

1

2

3

4

Cash flows

-$850

$300

$320

$340

$360

67.Stern Associates is considering a project that has the following cash flow data. What is the project’s payback?

Year

0

1

2

3

4

5

Cash flows

-$750

$300

$310

$320

$330

$340

68.Fernando Designs is considering a project that has the following cash flow and WACC data. What is the project’s discounted payback?

WACC:

10.00%

 

 

 

Year

0

1

2

3

Cash flows

-$950

$500

$500

61.Last month, Lloyd’s Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm’s WACC. The Fed’s action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project’s forecasted NPV? Note that a project’s projected NPV can be negative, in which case it should be rejected.

Old WACC:

10.00%

 

New WACC:

12.50%

Year

0

1

2

3

Cash flows

-$1,000

$410

$410

$410

62.Lasik Vision Inc. recently analyzed the project whose cash flows are shown below. However, before Lasik decided to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm’s WACC. The Fed’s action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project’s forecasted NPV? Note that a project’s projected NPV can be negative, in which case it should be rejected.

Old WACC:

8.00%

 

New WACC:

8.50%

Year

0

1

2

3

Cash flows

-$1,000

$410

$410

$410

63.Ehrmann Data Systems is considering a project that has the following cash flow and WACC data. What is the project’s MIRR? Note that a project’s projected MIRR can be less than the WACC (and even negative), in which case it will be rejected.

WACC:

8.75%

 

 

 

Year

0

1

2

3

Cash flows

-$1,000

$450

$450

$450

 

64.Ingram Electric Products is considering a project that has the following cash flow and WACC data. What is the project’s MIRR? Note that a project’s projected MIRR can be less than the WACC (and even negative), in which case it will be rejected.

WACC:

14.75%

 

 

 

Year

0

1

2

3

Cash flows

-$800

$350

$350

$350

65.Malholtra Inc. is considering a project that has the following cash flow and WACC data. What is the project’s MIRR? Note that a project’s projected MIRR can be less than the WACC (and even negative), in which case it will be rejected.

WACC:

10.00%

 

 

 

 

Year

0

1

2

3

4

Cash flows

-$1,175

$300

$320

$340

$360

66.Hindelang Inc. is considering a project that has the following cash flow and WACC data. What is the project’s MIRR? Note that a project’s projected MIRR can be less than the WACC (and even negative), in which case it will be rejected.

WACC:

13.25%

 

 

 

 

Year

0

1

2

3

4

Cash flows

-$850

$300

$320

$340

$360

67.Stern Associates is considering a project that has the following cash flow data. What is the project’s payback?

Year

0

1

2

3

4

5

Cash flows

-$750

$300

$310

$320

$330

$340

68.Fernando Designs is considering a project that has the following cash flow and WACC data. What is the project’s discounted payback?

WACC:

10.00%

 

 

 

Year

0

1

2

3

Cash flows

-$950

$500

$500

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