PART II: PROBLEMS Compute a final numerical answer for each of the following problems. You
should work out your solutions on loose leaf paper in an organized manner so that when I post the solution
key, you can determine why answers that you missed were incorrect. This will allow you to LEARN from
any mistakes so you to not repeat these on the Final Exam (which is worth 35% of your grade in this class).
Unless instructed otherwise on a question, round all dollar answers to 2 decimal places, record IRR values
as a percent rounded to 2 decimal places, round payback period or profitability index values to 1 decimal
place, and record WACC values as a percent rounded to 2 decimal places.
USE THE TABLE BELOW TO ANSWER THE FOLLOWING THREE (3) QUESTIONS
Year
Project A Cash Flows (Ss)
Project B Cash Flows (Ss)
Project C Cash Flows (Ss)
0
-100,000
-700,000
-2,325,000
1
20,000
150,000
2,500,000
2
25,000
180,000
2,500,000
3
30,000
140,000
2,500,000
4
30,000
190,000
5
25,000
110,000
6
20,000
110,000
26. The payback period for Project A is 3.83 years.
27. The payback period for Project B is 4.30 years.
28. The payback period for Project C is .93 years.
