### Question details

Quick Sale Real Estate Company is planning to invest in a new development.
\$ 15.00

Question 1 (1 point)

Quick Sale Real Estate Company is planning to invest in a new development. The cost of the project will be \$23 million and is expected to generate cash flows of \$14,000,000, \$11,750,000, and \$6,350,000 over the next three years. The company's cost of capital is 20 percent. What is the internal rate of return on this project? (Round to the nearest percent.)

Question 1 options:

 20% 24% 22% 28%

Initial investment = \$23,000,000
Length of project = n = 3 years
Required rate of return = k = 20%
To determine the IRR, the trial-and-error approach can be used. Set NPV = 0.
Try IRR = 21.6%.

Question 2 (1 point)

Muncy, Inc., is looking to add a new machine at a cost of \$4,133,250. The company expects this equipment will lead to cash flows of \$820,322, \$863,275, \$937,250, \$1,019,610, \$1,212,960, and \$1,225,000 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment?

Question 3 (1 point)

Given the following cash flows for a capital project, calculate the IRR using a financial calculator

 Year 0 1 2 3 4 5 Cash Flows (\$50,467) \$12,746 \$14,426 \$21,548 \$8,580 \$4,959

Question 3 options:

 8.41% 8.05% 8.79% 7.9%

Question 4 (1 point)

An investment of \$83 generates after-tax cash flows of \$38.00 in Year 1, \$68.00 in Year 2, and \$133.00 in Year 3. The required rate of return is 20 percent. The net present value is

Question 5 (1 point)

Cortez Art Gallery is adding to its existing buildings at a cost of \$2 million. The gallery expects to bring in additional cash flows of \$520,000, \$700,000, and \$1,000,000 over the next three years. Given a required rate of return of 10 percent, what is the NPV of this project?

Question 5 options:

-\$197,446

 \$1,802,554 \$197,446 -\$1,802,554 Initial investment = \$2,000,000 Length of project = n = 3 years Required rate of return = k = 10% Net present value = NPV NVP= -2mill +520000/1.1+700,000/1.2^2+1mill/1.3^3

Question 6 (1 point)

Which ONE of the following statements about the payback method is true?

Question 6 options:

 The payback method is consistent with the goal of shareholder wealth maximization The payback method represents the number of years it takes a project to recover its initial investment plus a required rate of return. There is no economic rational that links the payback method to shareholder wealth maximization. None of these statements are true.

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Question 7 (1 point)

McKenna Sports Authority is getting ready to produce a new line of gold clubs by investing \$1.85 million. The investment will result in additional cash flows of \$525,000, \$822,500, and \$1,200,000 over the next three years. What is the payback period for this project?

Question 8 (1 point)

Monroe, Inc., is evaluating a project. The company uses a 13.8 percent discount rate for this project. Cost and cash flows are shown in the table. What is the NPV of the project?

Year Project

0 (\$11,368,000)

1 \$ 2,112,590

2 \$ 3,787,552

3 \$ 3,325,650

4 \$ 4,115,899

5 \$ 4,556,424