Question

questions 20 , 21 , 22

Acct 102 Practice Test #5.pdf Download ?Info ×Close Page > of 13 ZOOM Dashboa 20 A company has a minimum required rate of return of 10% and is considering investing in a project that requires an investment of 1968,000 and is expected to generate cash inflows of $84,000 at the end of each year for three years. The present value of future cash inflows for this project is A) S196,000 B) S208,908 C) S229,796 D) S12,908 Cour 21 A company has a minimum required rate of return of 9% and is considering investing in a project that costs S350,000 and is expected to generate cash inflows of S140,000 at the end of each year for three years. The net present value A) $354,340 B) S70,000 C) S35,436. D) S4,340 of this project is 22. A company has a minimum required rate of return of 8% and is considering investing in a project that costs $136,674 and is expected to generate cash inflows of S54,000 each year for three years. The approximate internal rate of return on this project is A) 8%. B) 9%. C) 10%. D) less than the required 8%.

Answer 1

20	Answer B
	Year	Cash Flow	PVF @ 10%	Discounted Cash flow
	1	84,000	0.909	76,356
	2	84,000	0.826	69,384
	3	84,000	0.751	63,084
				2,08,824
21	Answer D
	Year	Cash Flow	PVF @ 9%	Discounted Cash flow
	0	(3,50,000)	1.000	(3,50,000)
	1	1,40,000	0.917	1,28,380
	2	1,40,000	0.842	1,17,880
	3	1,40,000	0.772	1,08,080
				4,340
22	IRR is 9%
	Year	Cash Flow	PVF @ 8%	Discounted Cash flow	PVF @ 9%
	0	(1,36,674)	1.000	(1,36,674)	1.000	(1,36,674)
	1	54,000	0.926	50,004	0.917	49,518
	2	54,000	0.857	46,278	0.842	45,468
	3	54,000	0.794	42,876	0.772	41,688
				2,484		-