Buy Coastal, Inc., imposes a payback cutoff of three years for its international investment projects. |

Year | Cash Flow (A) | Cash Flow (B) | |||||

0 | –$ | 53,000 | –$ | 63,000 | |||

1 | 19,500 | 11,500 | |||||

2 | 21,000 | 14,500 | |||||

3 | 17,500 | 19,000 | |||||

4 | 4,500 | 223,000 | |||||

What is the payback period for both projects? (Round your answers to 2 decimal places. (e.g., 32.16)) |

Payback period | |

Project A | years |

Project B | years |

Which project should the company accept? |

Project BProject A |

An investment project costs $10,000 and has annual cash flows of $2,950 for six years. |

What is the discounted payback period if the discount rate is zero percent? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16)) |

Discounted payback period | years |

What is the discounted payback period if the discount rate is 4 percent? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16)) |

Discounted payback period | years |

What is the discounted payback period if the discount rate is 21 percent? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16)) |

Discounted payback period | years |

A project that provides annual cash flows of $16,600 for eight years costs $72,000 today. |

What is the NPV for the project if the required return is 7 percent? (Round your answer to 2 decimal places. (e.g., 32.16)) |

NPV | $ |

At a required return of 7 percent, should the firm accept this project? |

AcceptReject |

What is the NPV for the project if the required return is 19 percent? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16)) |

NPV | $ |

At a required return of 19 percent, should the firm accept this project? |

AcceptReject |

At what discount rate would you be indifferent between accepting the project and rejecting it? (Round your answer to 2 decimal places. (e.g., 32.16)) |

Discount rate | % |

Garage, Inc., has identified the following two mutually exclusive projects: |

Year | Cash Flow (A) | Cash Flow (B) | |||||

0 | –$ | 29,200 | –$ | 29,200 | |||

1 | 14,600 | 4,400 | |||||

2 | 12,500 | 9,900 | |||||

3 | 9,300 | 15,400 | |||||

4 | 5,200 | 17,000 | |||||

a-1 | What is the IRR for each of these projects? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) |

IRR | |

Project A | % |

Project B | % |

a-2 | Using the IRR decision rule, which project should the company accept? |

Project AProject B |

a-3 | Is this decision necessarily correct? |

YesNo |

b-1 | If the required return is 10 percent, what is the NPV for each of these projects? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) |

NPV | |

Project A | $ |

Project B | $ |

b-2 | Which project will the company choose if it applies the NPV decision rule? |

Project AProject B |

c. | At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |

Discount rate | % |

Slow Ride Corp. is evaluating a project with the following cash flows: |

Year | Cash Flow | ||

0 | –$ | 29,900 | |

1 | 12,100 | ||

2 | 14,800 | ||

3 | 16,700 | ||

4 | 13,800 | ||

5 | – | 10,300 | |

The company uses an interest rate of 10 percent on all of its projects. |

Calculate the MIRR of the project using the discounting approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |

MIRR | % |

Calculate the MIRR of the project using the reinvestment approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |

MIRR | % |

Calculate the MIRR of the project using the combination approach method. |

MIRR | % |