Author Question: A project requires a current expenditure of $300 and expects to generate $100 cash inflows at the ... (Read 76 times)

vHAUNG6011 · **on:** Apr 25, 2021

Question 1

A project costs $1,000 today and is expected to produce cash inflows of $800 at the end of each of the next two years. If the firm's cost of capital is 10%, what is the modified internal rate of return? Round answer to the nearest whole percent.
◦ 30%
◦ 23%
◦ 13%
◦ 21%
◦ 33%

Question 2

A project requires a current expenditure of $300 and expects to generate $100 cash inflows at the end of each of the next 5 years. What conclusion can be drawn from examining an NPV profile for this project?
◦ Accept the project if the cost of capital exceeds 20%
◦ Accept the project if the cost of capital is below 20%
◦ Reject the project if the cost of capital exceeds 10%
◦ Reject the project if the cost of capital exceeds 7%
◦ Reject the project if the cost of capital exceeds 5%

robbielu01 · **Reply #1 on:** Apr 25, 2021

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