If a project's NPV is greater than zero,

The major cause of multiple IRRs and the resulting ranking conflicts between the NPV and IRR methods is because of differing

A major disadvantage of the payback period method is that it

If the NPV of a project is negative, then the discount rate that was used to discount the cash flows is

The Johnson Corporation is considering investing in two independent projects. The corporation follows a policy that requires acceptable projects to recover all costs within 3 years. The discount rate is 10%. The cash flows for the two projects are:

Time	Project 1	Project 2
0	-200,000	-$160,000
1	50,000	100,000
2	50,000	40,000
3	80,000	60,000
4	60,000	0

Which project(s) does the company invest in?

Project A has an IRR of 18% and Project B has an IRR of 16 percent and the company's cost of capital (discount rate) is 12%. However, Project B has a higher NPV than Project A. Assuming that the two projects are of equal cash flow scales,

A Corporation is considering an investment opportunity with estimated cash flows of $30,000 per year in Years 1 through 4, $35,000 per year in Years 5 through 9, and $40,000 in Year 10. This investment will cost the firm $150,000 today, and the firm's cost of capital is 10 percent. What is the payback period of this investment opportunity?

A company's manager is evaluating two mutually exclusive projects with the following net cash flows:

Year	Project X	Project Z
0	-$150,000	-$150,000
1	60,000	10,000
2	45,000	35,000
3	35,000	48,000
4	15,000	67,000

If the firm's cost of capital is 15 percent, which project would you choose?

Two projects being considered are mutually exclusive and have the following projected cash flows:

Year	Project X	Project Y
0	-$50,000	-$50,000
1	13,735	0
2	13,735	0
3	13,735	0
4	13,735	0
5	13,735	89,500

If the required rate of return on these projects is 10 percent, which project would be chosen and why?

The Michigan Instruments Company is deciding between two mutually exclusive projects with the following cash flows:

Time	Project A Cash Flows	Project B Cash Flows
0	-$60,000	-$35,000
1	12,000	7,000
2	18,000	14,000
3	38,000	19,000
4	22,000	13,000

The company's cost of capital (discount rate) is 10 percent. What is the net present value (NPV) of the project with the highest internal rate of return (IRR)?

Dale Industries is considering an investment project which has the following cash flows:

time	Project Cash Flows
0	-$1,000
1	500
2	400
3	600
4	300

The company's discount rate is 10 percent. What is the project's payback, internal rate of return, and net present value? (Round NPV to the nearest dollar)

The Virginia Company is analyzing an investment opportunity with estimated end-of-year cash flows of $30,000 per year in Years 1 through 4, $35,000 per year in Years 5 through 9, and $40,000 in Year 10. This investment will cost the company $150,000 today, and the firm's cost of capital is 10 percent. What is the NPV for this investment? (round to the nearest dollar)

The New Dimension Computer Company needs a new machine to produce computer chips for use in their computers. Two companies have submitted bids, and you are the financial analyst with the task of choosing one of the machines. You have estimated that the cash flows are the:

Year	Machine A	Machine B
0	-$1,000	-$1,000
1	0	475
2	0	475
3	0	475
4	1,950	475

If the cost of capital for your company is 6%, which of the following do you conclude is the best decision to make?

An investment project has an initial cost of $180 and generates inflows of $50 a year for the next five years. What is the project's payback period and IRR?

Given the following cash flows, what is the IRR of this project? (round to the nearest whole percent)

Time	Net cash flow
0	$1,520
1	-1,000
2	-1,500
3	500

ABC Service can purchase a new assembler for $15,052 that will provide an annual net cash flow of $6,000 per year for five years, at which time the assembler will be sold as junk for $750. Calculate the net present value of the assembler if the required rate of return is 12%. (Ignore taxes and round your answer to the nearest $10.)

Artie's Soccer Ball Company is considering a project with the following cash flows: Initial Outlay = $750,000, Incremental After Tax Cash Flows from Operations Year 1-4 = $250,000 per year, and an additional after-tax terminal Cash Flow at End of Year 4 = $40,000. Compute the net present value of this project if the company's discount rate is 8%. (Round answer to nearest dollar).

Real Goods, Inc. is analyzing purchasing a new machine. Two companies have submitted bids, and you have been assigned the task of choosing one of the machines. The estimated cash flows are as follows:

Year	Machine A	Machine B
0	-$2,000	-$2,000
1	0	850
2	0	850
3	0	850
4	4,287	850

What is the internal rate of return for each machine?

Consider the following projects, A, B, and C:

Year	Project A	Project B	Project C
0	-$3,600	-$6,000	-$3,500
1	0	$4,000	$2,000
2	0	3,000	0
3	0	2,000	2,000
4	0	0	2,000
5	$7,000	0	2,000

Which project is the most profitable project if the discount rate is 7.5%?

Consider a project with the following cash flows:

Year	After-tax Accounting Profits	After-tax Cash Flow from Operations
1	$799	$750
2	150	1,000
3	200	1,200

The initial outlay of the project is $1,500 and the terminal cash flow is zero. Compute the profitability index if the company's discount rate is 10%.

A firm is considering two mutually exclusive machines. Machine A has an up-front cost of $150,000 and produces positive after-tax cash inflows of $50,000 a year at the end of each of the next six years. Machine B has an up-front cost of $80,000 and produces after-tax cash inflows of $50,000 a year at the end of the next three years. At the end of the third year, machine B can be replaced at a cost of $85,000 (paid at t = 3). The replacement machine will produce after-tax cash inflows of $52,000 a year for three years (inflows received at t = 4, 5, and 6). The company's cost of capital is 11.5 percent. What is the net present value (on a six-year extended basis) of the most profitable machine? (Hint: Use the replacement chain method of calculating the NPV of each project and round your answer to the nearest dollar.)