FIN 5080 Chapter 10 Quiz Problems
Question 1
Calculate the payback period for a project that requires investment of $5,400 and will provide the cashflows of $1,200, $400, $700, $3,000 and $500 in years 1 thru 5 respectively.
Question 2
A project has the following cash flow. What is the project’s NPV?
Discount rate: 
11.00% 




Year 
0 
1 
2 
3 
4 
Cash flows 
−$1,000 
$350 
$350 
$350 
$350 
Question 3
IRR has the following drawbacks. Check all that apply. No credit if you miss or wrongly check any option.

o IRR may lead you to a wrong decision if you are deciding between mutually exclusive projects. 


o For a project with conventional cashflows you may decide to take a project based on IRR when NPV would have led you to reject the project. 


o IRR assumes that intermediate cashflows from a project are invested at IRR 


o There may be several IRRs if the cashflows are unconventional 


o You may get a negative IRR
Question 4 A project has the following cashflow. Calculate NPV.
Question 5 Calculate the project’s IRR. Do not write the ‘%’ sign in your answer. If the answer is 12.45%, you will enter 12.45
Question 6 A project has following cashflow. Calculate NPV
Question 7 Given the following cashflows calculate NPV.
Question 8 Given the following cashflows calculate payback period.
Question 9 Calculate the NPV of a project that requires investment of 937 and provides the cashflows of 104, 232, 294, 272 in the next 4 years. The relevant discount rate is 12%. (All numbers are in dollars) Question 10 Find the payback period for a project that requires investment of $48 and returns $14 every years for 7 years.
