Capital budgeting (Practice)

Suppose a particular investment project will require an initial cash outlay of $1,000,000 and will generate a cash inflow of $500,000 in each of the next three years. What is the project’s IRR? Suppose a company’s hurdle rate is 15%, should it accept the project?. 23%; reject the project. 15%; reject the project. 15%; accept the project. 23%; accept the project.

Ibek Semiconductors is evaluating a new etching tool. The equipment costs $1.0m and will generate after-tax cash inflows of $0.4m per year for six years. Assume the firm has a 15% cost of capital. What’s the NPV of the investment?. $0.51m. $0.45m. $1.51m. $1.61m.

Suppose a particular investment project will generate an immediate cash inflow of $1,000,000 followed by cash outflows of $500,000 in each of the next three years. What is the project’s IRR? Suppose a company’s hurdle rate is 15%, should it accept the project?. 23%; reject the project. 23%; accept the project. 15%; reject the project. 15%; accept the project.

Consider a project with the following cash flows. Year and Cash Flow 0 = -$16,000 1 = 42,000 2 = -27,000 What are the results of IIR?. 12.5%. 25%. 50%. 75%.

Consider a project with the following cash flows. Year and Cash Flow 0 = 80 1 = -388 2 = 700 3 = -557 4 = 165 What are the results of IIR?. 10%, 25%, 50%. 10%, 20%, 50%. 0%, 10%, 25%, 50%. 10%, 25%.

An entrepreneur is offered a service contract that will cost him $600,000 initially. The contract has a 5 years of life and will generate an after tax cash inflow of $160,000 per year. The cost of capital of this project is 10.42%. Should the entrepreneur accept the contract?. SI. NO. IS INDIFFERENT.

An entrepreneur is offered a service contract that will cost him $600,000 initially. The contract has a 5 years of life and will generate an after tax cash inflow of $160,000 per year. The cost of capital of this project is 10%. What’s the NPV of the project?. $6252.88. $6525.88. $-6525.88. $6588.25.

Yellows, Co., has estimated that a proposed project's 10-year annual net cash benefit, received each year end, will be $1,000 with an additional terminal benefit of $1,000 at the end of the tenth year. Assuming that these cash inflows satisfy exactly Yellows, Co. required rate of return of 10 percent, calculate the initial cash outlay. $5,630. $6,530. $6,350. $3,650.

A company is considering a project that calls for an initial cash outlay of $50,000. The expected net cash inflows from the project are $7,791 for each of 10 years. What is the IRR of the project?. 6%. 9%. 7.5%. 9.5%.

Calculate and Match: CF0 $90,000; CF1 $20,000; CF2 $25,000; CF3 $30,000; CF4 $35,000; CF5 $40,000. CF0 $490,000; CF1 $150,000; CF2 $150,000; CF3 $150,000; CF4 $150,000. CF0 $20,000; CF1 $7500; CF2 $7500; CF3 $7500; CF4 $7500; CF5 $7500. CF0 $240,000; CF1 $120,000; CF2 $100,000; CF3 $80,000; CF4 $60,000.