Finance Home work.

13-1 NPV with Normal Cash Flows Compute the NPV for Project M and accept or reject the

project with the cash flows shown below if the appropriate cost of capital is 8 percent. (LG13-3)

Project M

Time: 0 1 2 3 4 5

Cash flow 2$1,000 $350 $480 $520 $600 $100

13-2 NPV with Normal Cash Flows Compute the NPV statistic for Project Y and indicate

whether the firm should accept or reject the project with the cash flows shown below if the

appropriate cost of capital is 12 percent. (LG13-3)

Project Y

Time: 0 1 2 3 4

Cash flow 2$8,000 $3,350 $4,180 $1,520 $300

13-3 NPV with Non-Normal Cash Flows Compute the NPV statistic for Project U and rec-

ommend whether the firm should accept or reject the project with the cash flows shown

below if the appropriate cost of capital is 10 percent. (LG13-3)

Project U

Time: 0 1 2 3 4 5

Cash flow 2$1,000 $350 $1,480 $520 $300 2$100

13-4 NPV with Non-Normal Cash Flows Compute the NPV statistic for Project K and rec-

ommend whether the firm should accept or reject the project with the cash flows shown

below if the appropriate cost of capital is 6 percent. (LG13-3)

Project K

Time: 0 1 2 3 4 5

Cash flow 2$10,000 $5,000 $6,000 $6,000 $5,000 2$10,000

13-5 Payback Compute the payback statistic for Project B and decide whether the firm should

accept or reject the project with the cash flows shown below if the appropriate cost of capi-

tal is 12 percent and the maximum allowable payback is three years. (LG13-2)

Project B

Time: 0 1 2 3 4 5

Cash flow 2$11,000 $3,350 $4,180 $1,520 $0 $1,000

13-6 Payback Compute the payback statistic for Project A and recommend whether the firm

should accept or reject the project with the cash flows shown below if the appropriate cost

of capital is 8 percent and the maximum allowable payback is four years. (LG13-2)

Project A

Time: 0 1 2 3 4 5

Cash flow 2$1,000 $350 $480 $520 $300 $100

13-7 Discounted Payback Compute the discounted payback statistic for Project C and rec-

ommend whether the firm should accept or reject the project with the cash flows shown

below if the appropriate cost of capital is 8 percent and the maximum allowable discounted

payback is three years. (LG13-2) Time: 0 1 2 3 4 5

Cash flow 2$1,000 $480 $480 $520 $300 $100

13-8 Discounted Payback Compute the discounted payback statistic for Project D and rec-

ommend whether the firm should accept or reject the project with the cash flows shown

below if the appropriate cost of capital is 12 percent and the maximum allowable dis-

counted payback is four years. (LG13-2)

Project D

Time: 0 1 2 3 4 5

Cash flow 2$11,000 $3,350 $4,180 $1,520 $0 $1,000

13-13 PI Compute the PI statistic for Project Z and advise the firm whether to accept or reject

the project with the cash flows shown below if the appropriate cost of capital is 8 percent.

(LG13-6)

Project Z

Time: 0 1 2 3 4 5

Cash flow 2$1,000 $350 $480 $650 $300 $100

13-14 PI Compute the PI statistic for Project Q and indicate whether you would accept or reject the

project with the cash flows shown below if the appropriate cost of capital is 12 percent. (LG13-6)

Project Q

Time: 0 1 2 3 4

Cash flow 2$11,000 $3,350 $4,180 $1,520 $2,000