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 trialanderror approach can be used. Set NPV = 0.
Try IRR = 21.6%.
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% 
An investment of $83 generates aftertax 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 



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. 
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
Your Answer:
Question 8 options:

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