Multiple Choice Question 56 

Net present value: The Cyclone Golf Resorts is redoing its golf course at a cost of $2,744,320. It expects to generate cash flows of $1, 223,445, $2,007,812, and $3,147,890 over the next three years. If the appropriate discount rate for the firm is 13 percent, what is the NPV of this project?
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$4,836,752 
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$2,092,432 
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$3,112,459 
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$7,581,072 

Multiple Choice Question 58 



Net present value: Cortez Art Gallery is adding to its existing buildings at a cost of $2 million. The gallery expects to bring in additional cash flows of $520,000, $700,000, and $1,000,000 over the next three years. Given a required rate of return of 10 percent, what is the NPV of this project?
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$197,446 
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$1,802,554 
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$1,802,554 
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$197,446


Multiple Choice Question 62 



Payback: Elmer Sporting Goods is getting ready to produce a new line of gold clubs by investing $1.85 million. The investment will result in additional cash flows of $525,000, $812,500, and 1,200,000 over the next three years. What is the payback period for this project?
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3 years 
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More than 3 years 
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2.43 years 
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1.57 years 

Multiple Choice Question 71 



Internal rate of return: Quick Sale Real Estate Company is planning to invest in a new development. The cost of the project will be $23 million and is expected to generate cash flows of $14,000,000, $11,750,000, and $6,350,000 over the next three years. The company’s cost of capital is 20 percent. What is the internal rate of return on this project? (Round to the nearest percent.) 21.57177%
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22% 
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20% 
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28% 
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24%


Problem 10.42 



An investment of $89 generates aftertax cash flows of $47 in Year 1, $71 in Year 2, and $138 in Year 3. The required rate of return is 20 percent. The net present value is closest to
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$57.41. 
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$79.33. 
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$36.37. 
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$54.37.


Problem 10.40 



Given the following cash flows for a capital project, calculate the NPV and IRR. The required rate of return is 8 percent.
Year 

0 
1 
2 
3 
4 
5 

Cash Flows 
$49740 
$14540 
$15075 
$20404 
$10577 
$5497 
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NPV=4360. IRR=12.84% 
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NPV=3289. IRR=12.84% 
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NPV=3289. IRR=11.66% 
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NPV=4360. IRR=11.66% 