Business Finance
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QuestionsandProblems.xlsxChapter 9
| If you just type in numbers as answers, you need to show how they were calculated. | ||
| If answers are determined using excel functions, that is sufficient to demonstrate how they were calculated. | ||
| No response to a question will receive zero credit. If you at least attemp a solution, you may receive partial credit. | ||
| correct | ||
| The expected cash flows for a project are as follows. The required return is 12 percent. | ||
| Ch9-1 | Calculate the Internal Rate of Return and state whether the project should be accepted or rejected. | |
| year | cash flow | |
| 0 | (32,000) | |
| 1 | 14,000 | |
| 2 | 15,750 | |
| 3 | 11,250 | |
| The expected cash flows for a project are shown below. | ||
| Ch9-2a | Calculate the NPV with a 14% required rate of return and state whether the project should be accepted or rejected. | |
| Ch9-2b | Calculate the NPV with a 20% required rate of return and state whether the project should be accepted or rejected. | |
| year | cash flow | |
| 0 | (38,500) | |
| 1 | 16,750 | |
| 2 | 20,250 | |
| 3 | 17,500 | |
Chapter 10
| If you just type in numbers as answers, you need to show how they were calculated. | |
| If answers are determined using excel functions, that is sufficient to demonstrate how they were calculated. | |
| No response to a question will receive zero credit. If you at least attemp a solution, you may receive partial credit. | |
| Calculating Projected Net Income [LO1] A proposed new investment has projected sales of $740,000. Variable costs are 46 percent of sales, and fixed costs are $225,000; depreciation is $78,000. | |
| Ch10-1a | Prepare a pro forma income statement assuming a tax rate of 32 percent. |
| Ch10-1b | What is the projected net income? |
| Project Evaluation [LO1] A company is looking at a new production system with an installed cost of $725,000. This cost will be depreciated in equal installments over the project’s five-year life, at the end of which the system will retain a salvage value of $125,000. The system will save the firm $275,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $38,000. | |
| Ch10-2 | If the tax rate is 36 percent and the discount rate is 12 percent, what is the NPV of this project? |
Chapter 11
| If you just type in numbers as answers, you need to show how they were calculated. | ||||||
| If answers are determined using excel functions, that is sufficient to demonstrate how they were calculated. | ||||||
| No response to a question will receive zero credit. If you at least attemp a solution, you may receive partial credit. | ||||||
| Calculating Break-Even [LO3] In each of the following cases: | ||||||
| Calculate the accounting break-even and the cash break-even points. Ignore any tax effects in calculating the cash break-even. | ||||||
| unit price | variable cost per unit | fixed cost | annual depreciation | cash break-even quantity | accounting break-even quantity | |
| Ch11-1a | 2,200 | 1,850 | 6,000,000 | 2,200,000 | ||
| Ch11-1b | 50 | 42 | 150,000 | 145,000 | ||
| Ch11-1c | 275 | 210 | 16,250 | 18,750 | ||
| Using Break-Even Analysis [LO3] Consider a project with the following data: accounting break-even quantity = 15,400 units; cash break-even quantity = 12,200 units; project life = 6 years; fixed costs = $220,000; variable costs = $34 per unit; required return = 10 percent. Ignore the effect of taxes. | ||||||
| Ch11-2 | Find the financial break-even quantity. | |||||
