Please help with multiple choice questions. 6. A capital investment has a net present value of $1 000 at a rate of return of 10percent. At a 12 percent rate of return, the net present value of the investment is$100. At a 14 percent rate of return, the net present value of the investment is $0.Under what circumstance should the project be rejected? When the required rateof return:a.exceeds 12 percentb.is less than 12 percentC.exceeds 14 percentd.is less than 14 percent7. What is the budgeted production for the month of September?The Lubriderm Corporation has the following budgeted sales for the next six-monthperiod:MonthUnit salesJuneJulyAugustSeptemberOctoberNovember90,000120,000210,000150,000180,000120,000a.$156 000b.$188 000C.256 000d.$198 000

Net Present Value (NPV): When doing an analysis of the profitability of a project or investment,…

6. A capital investment has a net present value of $1 000 at a rate of return of 10 percent. At a 12 percent rate of return, the net present value of the investment is $100. At a 14 percent rate of return, the net present value of the investment is $0. Under what circumstance should the project be rejected? When the required rate of return: а. exceeds 12 percent b. is less than 12 percent C. exceeds 14 percent d. is less than 14 percent

6. A capital investment has a net present value of $1 000 at a rate of return of 10 percent. At a 12 percent rate of return, the net present value of the investment is $100. At a 14 percent rate of return, the net present value of the investment is $0. Under what circumstance should the project be rejected? When the required rate of return: а. exceeds 12 percent b. is less than 12 percent C. exceeds 14 percent d. is less than 14 percent

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 13P

See similar textbooks

Similar questions

Assume an investment has cash flows of −$25,200, $7,000, $8,000, $8,500, and $9,000 for Years 0 to 4, respectively. What is the NPV if the required return is 12 percent? (do not round intermediate calculations, enter negative number with a minus sign and round your answer to 2 decimal places, e.g., -32.16.) Should the project be accepted or rejected?
Assume an investment has cash flows of −$25,200, $7,000, $8,000, $8,500, and $9,000 for Years 0 to 4, respectively. What is the NPV if the required return is 11.1 percent? Blank 1 (do not round intermediate calculations, enter negative number with a minus sign and round your answer to 2 decimal places, e.g., -32.16.) Should the project be accepted or rejected? Blank 2 (write either "accepted" or "rejected")
An investment has an installed cost of $537,800. The cash flows over the four-year life of the investment are projected to be $212,750, $229,350, $196,010, and $144,720, respectively. a. If the discount rate is zero, what is the NPV? (Do not round intermediate calculations.) b. If the discount rate is infinite, what is the NPV? (A negative answer should be indicated by a minus sign.) c. At what discount rate is the NPV just equal to zero? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. NPV b. NPV c. IRR %
8. You have to choose between two mutually exclusive investments: Project A B Co C₁ -200 250 -300 360 a. Calculate the IRR for each project. Which project would you choose based on the IRR rule? b. Which project would you choose based on the NPV rule? Consider the following two scenarios for the cost of capital: i. Assume that the cost of capital is 6%. ii. Assume that the cost of capital is 16%. c. For what range of values for the cost of capital would you choose project A and for what range of values for the cost of capital would you choose project B? Briefly motivate your answer.
An investment has an installed cost of $532,800. The cash flows over the four-year life of the investment are projected to be $216,850, $233,450, $200,110, and $148,820, respectively. a. If the discount rate is zero, what is the NPV? (Do not round intermediate calculations.) b. If the discount rate is infinite, what is the NPV? (A negative answer should be indicated by a minus sign.) c. At what discount rate is the NPV just equal to zero? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. NPV b. NPV c. IRR Q % l
Which of the following comes closest to the net present value (NPV) of a project whose initial investment is $5 and which produces two cash flows: the first at the end of year 2 of $3 and the second at the end of year 4 of $7? The required rate of return is 13%? Select one: a. $1.84 b. $0 c. $1.64 d. $2.05 e. $2.26
Assume an investment has cash flows of -$25, 200, $7,000, $8,000, $8,500, and $9,000 for Years 0 to 4, respectively. What is the NPV if the required return is 12 percent? (do not round intermediate calculations, enter negative number with a minus sign and round your answer to 2 decimal places, e.g., -32.16.) Should the project be accepted or rejected? (write either "accepted" or "rejected")
Midas Corp. evaluated a potential investment and determined the NPV to be zero. Midas Corp.s required rate of return is 9.1% and its cost of capital is 6.4%.
Which of the following statements is true if the NPV of a project is - $4,000 (negative $4,000) and the required rate of return is 5 percent?a. The project’s IRR is less than 5 percent.b. The required rate of return is lower than the IRR.c. The NPV assumes cash flows are reinvested at the IRR.d. The NPV would be positive if the IRR was equal to 5 percent.
Project 1 requires an initial investment on $50,000 and has an internal rate of return (IRR) of 18%. A mutually exclusive alternative, Project 2, requires an investment of $70,000 and has an IRR of 23%. Which of the following statements is true concerning the rate of return on the incremental $20,000 investment? (a) It is less than 18%. (b) It is between 18 and 23%. (c) It is greater than 23%. (d) It cannot be determined from the data given.
es Assume an investment has cash flows of -$105,000, $140,000, $200,000, and $485,000 for Years 0 to 3, respectively. What is the NPV if the required return is 13.5 percent? Should the project be accepted or rejected? Multiple Choice $501,656; reject $533,466; accept $505,307; reject
Assume an investment has an initial cost of $30,000 and future cash flows of $21,750, $18,500, and $12,500 for years 1 to 3, respectively. What is the NPV if the required return is 13 percent? Should the project be accepted or rejected?