# Project #75120 - Homework #6 most review two help

#### Question 1Â (1 point)

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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.)

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Question 1 options:
 20% 24% 22% 28%
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#### Question 2Â (1 point)

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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 \$815,822, \$863,275, \$937,250, \$1,017,610, \$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?

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Question 2 options:
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#### Question 3Â (1 point)

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

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

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Question 3 options:
 8.41% 8.05% 8.79% 7.9%
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#### Question 4Â (1 point)

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An investment of \$83 generates after-tax cash flows of \$48.00 in Year 1, \$68.00 in Year 2, and \$127.00 in Year 3. The required rate of return is 20 percent. The net present value is

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Question 4 options:
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#### Question 5Â (1 point)

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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?

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Question 5 options:
 -\$197,446 \$1,802,554 \$197,446 -\$1,802,554
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#### Question 6Â (1 point)

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WhichÂ ONEÂ of the following statements about the payback method is true?

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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 7Â (1 point)

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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, \$847,500, and \$1,200,000 over the next three years. What is the payback period for this project?

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Question 7 options:
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#### Question 8Â (1 point)

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