A project will produce cash inflows of 3,100ayearfor3yearswithafinalcashinflowof3,100ayearfor3yearswithafinalcashinflowof4,400 in YearThe project's initial cost is 10,Whatisthenetpresentvalueiftherequiredrateofreturnis16percent?−10,Whatisthenetpresentvalueiftherequiredrateofreturnis16percent?−311.02-1,007.661,007.661,650.112,188.982,188.981,168.02
  • 2.91 years
  • Accept; 11.64
  • -$306.15; reject
  • -$1,007.66
You are comparing two mutually exclusive projects. The crossover point is 12.3 percent. You have determined that you should accept project A if the required return is 13.1 percent. This implies you should:Always accept Project A.Be indifferent to the projects at any discount rate above 13.1 percent.Always accept Project A if the required return exceeds the crossover rate.Accept Project B only when the required return is equal to the crossover rate.Accept Project B if the required return is less than 13.1 percent.
  • Always accept Project A if the required return exceeds the crossover rate.
  • An increase in the aftertax salvage value of the fixed assets.
  • the ARR cannot be computed (no NI)
  • Accept A at 11.7 percent and neither at 13.5 percent.
Project A has cash flows of -74,900,74,900,18,400, 26,300,and26,300,and57,100 for years 0 to 3, respectively. Project B has cash flows of -79,000,79,000,18,400, 22,700,and22,700,and51,500 for years 0 to 3, respectively. Both projects are independent and use straight-line depreciation to a zero balance over the project life. Neither project has any salvage value and both have a required accounting return of 11.5 percent. Should you accept or reject these projects based on the average accounting return?Accept Project A and reject Project BReject Project A and accept Project BAccept both projectsReject both projectsThe AAR cannot be computed.
  • the ARR cannot be computed (no NI)
  • Accept A at 11.7 percent and neither at 13.5 percent.
  • Yes; The MIRR is 14.45 percent.
  • 13.58 percent
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