Project #43409 - quiz 6


Instructions for the quiz


Question 1 -  The easiest way to solve for this question is to use the IRR function in excel.


Question 2 – Although there are many methods that can be employed to solve for this problem , however, the easiest method (my opinion) will be to use the NPV function in excel.


Question 3 – Each financial calculator is operated differently, so please consult your financial calculator’s manual.  The textbook provided some general guidance on page 320.


 Question 4 – You may employ the NPV function in excel to solve for this problem.


 Question 5 -  You may employ the NPV function in excel to solve for this problem.


 Question 6 - Please read carefully through chapter 10 to find the answer to this question.


 Question 7 – Payback = Years before cost recovery + (Remaining cost to recover/ Cash flow during the year).  There is an excellent example on page 315 that provides a step-by-step guidance on how to solve these kinds of problems.


 Question 8 - You may employ the NPV function in excel to solve for this problem.




Top of Form


Note: It is recommended that you save your response as you complete each question.


Question 1 (1 point)


 Question 1 Saved


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:













Question 2 (1 point)


 Question 2 Saved


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 $817,322, $863,275, $937,250, $1,019,110, $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?


Your Answer:


Question 2 options:







Question 3 (1 point)


 Question 3 Saved


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











Cash Flows












Question 3 options:













Question 4 (1 point)


 Question 4 Saved


An investment of $83 generates after-tax cash flows of $50.00 in Year 1, $72.00 in Year 2, and $129.00 in Year 3. The required rate of return is 20 percent. The net present value is


Your Answer:


Question 4 options:







Question 5 (1 point)


 Question 5 Saved


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:













Question 6 (1 point)


 Question 6 Saved


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)


 Question 7 Saved


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 $1,245,000 over the next three years. What is the payback period for this project?


Your Answer:


Question 7 options:







Question 8 (1 point)


 Question 8 Saved


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               $  2,202,590


  2               $  3,787,552


  3               $  3,300,650


  4               $  4,115,899


  5               $  4,556,424


Your Answer:


Question 8 options:







Please ensure


1. The questions have been set to give full credit as long as the answer given is within 1% (+ or -) of the correct answer. That means if you give at least 3 non-zero digits after rounding, then you will receive full credit. For example, if the answer to a question is 2,496.79, you will receive full credit if your calculation lies between 2,490 and 2,500.  If you wish to be precise, any answer in the range 2,471.82 to 2,521.75 will receive full credit (i.e.  -1% to +1% error tolerated).

If the answer to a question is 0.045825, then the answer 0.04 will not be adequate and will receive no credit.  Instead, you must write the first 3 non-zero digits in the answer.  So the answer 0.0458 is correct because it has the first 3 relevant digits. The last 0.000025 can be dropped.


2. Do not use currency signs.  Suppose the answer is $40.42, then you should answer 40.4 or 40.42.
3.  Do not use “(.)” to show negative quantities.  Use the “-” sign.  If the answer is –0.5192, then do not answer (0.519), rather answer –0.519 or –0.5192.
4.  When you have a question involving a percentage, answer it instead as a decimal.  For example, if the answer for a rate of return is 10.5%, then enter the answer as 0.105 instead of 10.5 or 10.5%.  Basically answer the question as the actual number instead of answering it as a percentage.




Subject Mathematics
Due By (Pacific Time) 10/17/2014 12:00 am
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