Question

AssumeMARR-12%.everywhereinthe examunlessotherwise-speci ned Ch.5 and 6 1) The following table provides cost and unit sales projections for a firm. Find the break-even price assuming a constant price for the life of the project. Costs $1,000,000 $400,000 5600,000 $700,000 Units Sold 60,000 100,000 180,000 2 a) 8.03-8.23 b) 8.23-8.43 c) 8.43-8.63 d) 8.63-8.83 e) None of the above Use the following two projects in the next 3 questions. Project A is a four project and project B is a three-year project. Project B -300 500 n Project A 900 0 600 500 400 300 -130 2) What is the IRR of Project A? a) 36-37% b) 37-38% c) 38-39% d) 40-41% e) None of the above 3) What is the IRR of Project B? a) 32-32.5% b) 32.5-33% c) 33-33.5% d) 33.5-34% e) None of the above 4) Assume we are trying to decide on a project that would be run for an indefinite period of time. Only one of the two projects above can be chosen. What is the NPW difference between the two indefinite projects? a) 1200- 1230 b) 1230-1260 c) 1260-1290 d) 1290-1320 None of the above e) 5) Find the Incremental IRR of the following two projects. Choose the closest answer from the options below. n Project A Project B 0 -900 1 -600 2 -500 3 400 -900 -300 -1000 -270 0 a) 28% b) 29% c) 30% d) 31% e) 32% Ch.11 Use the following information to answer the next 5 questions Defender: Current trade-in (re-sale) value-$7,000, decreasing at an annual rate of 30% from the previous year's value O&M-$2,200 in year 1, increasing by 40% per year O Immediate overhaul required (if kept)- s500 O Maximum possible lifespan is 5 additional years of service (from now) Challenger: Nc 3, AECc -5900 6) What is AECD.? a) 5400-5425 b) 5425-5450 c) 5450 5475 d) 5475-5500 e) None of the above

Answer 1

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