1. A project has an initial outlay of $4,807. It has a single payoff at the end
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Question
1.
A project has an initial outlay of $4,807. It has a single payoff at the end of year 4 of $6,636. What is the net present value (NPV) of the project if the company’s cost of capital is 13.59 percent?
Round the answer to two decimal places.
Your Answer:
2.
Find the modified internal rate of return (MIRR) for the following series of future cash flows if the company is able to reinvest cash flows received from the project at an annual rate of 11.57 percent.The initial outlay is $496,600.
Year 1: $145,200
Year 2: $146,500
Year 3: $131,300
Year 4: $177,800
Year 5: $196,400
Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)
3.
A project has an initial outlay of $3,171. It has a single payoff at the end of year 2 of $6,538. What is the profitability index (PI) of the project, if the company’s cost of capital is 14.35 percent?
Round the answer to two decimal places.
Your Answer:
4.
The Black Bird Company plans an expansion. The expansion is to be financed by selling $188 million in new debt and $51 million in new common stock. The before-tax required rate of return on debt is 10.62% percent and the required rate of return on equity is 15.73% percent. If the company is in the 34 percent tax bracket, what is the weighted average cost of capital?
Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)
Your Answer:
Explanation / Answer
1 Calculation of NPV NPV = Cash Inflows- cash Outflows Year cash flow Discount 0 -4807 1 -4807 4 6636 0.6 3986.08 NPV -820.92 Net Present Value is -820.92 3 Profitability Index = Cash Inflows/ Cash Outflows Cash Outflow = 3171 Cash Inflow = 6538*.764 5000.03 Profitability Index = 5000/3171 1.57679 Profitability Index is 1.58
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