Answer 1)
Correct answer is Option A. WACC - The firms' required return. It is used as a discount rate in NPV and is used to compare to IRR
Answer 2)
Correct answer is Option C. It ignores time value of money.
Answer 3)
NPV is given by:
Hence,
NPV = -500 + 200 / 1.06^1 + 300 / 1.06^2 + 250 / 1.06^3 + 125 / 1.06^4
So correct answer is Option C.
Answer 4)
The discount rate at which NPV = 0 is known as IRR
Hence,
0 = -500 + 125 / (1 + irr)^1 + 250 / (1 + irr)^2 + 175 / (1 + irr)^3 + 195 / (1 + irr)^4
So correct answer is Option A.
Question 1 5 pts What is WACC? Why is it important? O The firm's required return....
Question 10 5 pts What is Project B's Internal Rate of Return (IRR) with a WACC of 7.75%? YEAR CASH FLOWS Project A Project B 0 -$1050 -$1050 1 675 360 1 2 650 360 3 360 4 360 HTML Editora BTA - A - IEE 32. * DoPNV GODT 12pt Paragraph
Dropdown options first 2 blanks: (internal rate of return IRR,
required rate of return, modified internal rate of return MIRR)
Dropdown options 3rd blank: (NPV method, IRR method)
If projects are mutually exclusive, only one project can be chosen. The internal rate of return (IRR) and the net present value (NPV) methods will not always choose the same project. If the crossover rate on the NPV profile is below the horizontal axis, the methods will agree. always Projects Y and...
First Blank: always, sometimes, never
Second Blank: IRR, MIRR, required rate of return
Third Blank: IRR, MIRR, required rate of return
Fourth Blank: IRR method, NPV method
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