1.You are considering a $50000 project and feel that a 12 percent rate of retur

1.You are considering a $50000 project and feel that a 12 percent rate of return is reasonable given the nature of the risk involved. The project will
generate Cash Flows of $8000 in Year 1 $19800 in Year 2 $43000 in Year 3 and $7000 in Year 4. What is the Net Present Value (NPV) of the project? $3673.12 $7982.47 $620.11 $2284.60
2.A firm IS CONSIDERING the following project:
Year CASH FLOW (Project X)
0 -$27000
1 $14000
2 $10000
3 $31000
4 $18000
What is the IRR for Project X?
29.83% 14.81% 34.66% 48.81%
3.
The Descartes Rule of Sign: ALLOWS for determining the ONE TRUE Internal Rate of Return (IRR) when sign changes in Cash Flows are properly
considered PROJECTS the number of NPVs a project has when sign changes in Cash Flows are considered. Determines the MINIMUM number of IRRs a project can have when there are MORE THAN ONE sign change in a stream
of capital budgeting project Cash Flows Determines the MAXIMUM number of IRRs a project can have when there are MORE THAN ONE sign change in a stream
of capital budgeting project Cash Flows