Questions from Corporate Finance

Q: Daria is evaluating two investments—investment 1 will produce cash flows

Daria is evaluating two investments—investment 1 will produce cash flows for the next 5 years and has an NPV of $1,000. Investment 2 will produce cash flows for the next 15 years and has an NPV of $70...

Q: What is the crossover rate ( r ) given the following?

What is the crossover rate ( r ) given the following? Project A: C F0 $25,000; C F1 $6,600; C F2 $10,200; C F3 $19,800 P roject B: C F0 $20,000; C F1 $5,400; C F2 $7,800; C F3 $16,500

Q: If the NPV of a project is $5,360 and

If the NPV of a project is $5,360 and its after‐tax initial investment is $12,050, what is its PI? Should the firm accept the project? Does the PI yield the same decision as the NPV? (Assume all the c...

Q: SK Inc. has two projects as follows: /

SK Inc. has two projects as follows: If SK set 2.6 years as a cut‐off period for screening projects, which projects will be selected, using the payback period method?

Q: What is the difference between sensitivity analysis and scenario analysis?

What is the difference between sensitivity analysis and scenario analysis?

Q: Which project(s) will be selected if the company uses

Which project(s) will be selected if the company uses the discounted payback period method in Practice Problem 34 and the discount rate is 12 percent?

Q: State the decision rules for NPV, IRR, PI, and

State the decision rules for NPV, IRR, PI, and the discounted payback period. List two possible consequences of using IRR.

Q: SK Inc. has a project that requires a $60,

SK Inc. has a project that requires a $60,000 after‐tax initial investment and produces these after‐tax cash flows at each year‐end: $20,000; $22,000; −$8,000; $38,050; $55,000; and $16,000. The appro...

Q: Calculate the NPV and IRR of the following project and check whether

Calculate the NPV and IRR of the following project and check whether they produce the same decision. After‐tax initial investment is $66,777; after‐tax cash flows at each of the following six year‐end...

Q: You have two mutually exclusive projects: / Irrespective of

You have two mutually exclusive projects: Irrespective of the project, the discount rate is 10 percent. Calculate the payback and discounted payback periods for the projects. Which one will you consid...