Question 17 Cornell Enterprises is considering a project that has the following
ID: 2665910 • Letter: Q
Question
Question 17
Cornell Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's expected NPV can be negative, in which case it will be rejected.
WACC:
10.00%
Year
0
1
2
3
Cash flows
-$1,050
$450
$460
$470
Answers
$92.37
$96.99
$101.84
$106.93
$112.28
Question 18
CORNELL ENTERPRISES is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's IRR can be less than the WACC (and even negative), in which case it will be rejected.
Year
0
1
2
3
4
Cash flows
-$850
$300
$290
$280
$270
Answers
13.13%
14.44%
15.89%
17.48%
19.22%
Question 19
CORNELL Associates is considering a project that has the following cash flow data. What is the project's payback?
Year
0
1
2
3
4
5
Cash flows
-$1,100
$300
$310
$320
$330
$340
Answers
2.31 years
2.56 years
2.85 years
3.16 years
3.52 years
Question 20
CORNELL ENTERPRISES DESIGN DVISION (Fernando Designs) is considering a project that has the following cash flow and WACC data. What is the project's discounted payback?
WACC:
10.00%
Year
0
1
2
3
Cash flows
-$900
$500
$500
$500
AnswerS
1.88 years
2.09 years
2.29 years
2.52 years
2.78 years
Cornell Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's expected NPV can be negative, in which case it will be rejected.
WACC:
10.00%
Year
0
1
2
3
Cash flows
-$1,050
$450
$460
$470
Answers
$92.37
$96.99
$101.84
$106.93
$112.28
Explanation / Answer
17.
18.
In excel use IRR fuction to calculate
IRR = 13.13%
19.
3years
1100-930=170
170/330 = .52
Pay back period = 3.52 year
20.
2years
900-867.77 = 32.23/375.66 = .09
Discounted Pay back period = 2.09 years
WACC: 10.00% Year 0 1 2 3 Cash flows -$1,050 $450 $460 $470 PV @ 10% 1.000 0.909 0.826 0.751 PV -$1,050.00 $409.09 $380.17 $353.12 NPV $92.37Related Questions
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