ACCT 201 Lecture Notes - Lecture 1: Managerial Finance, Project Y, Payback Period
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Dr. ron a. rhoades (cid:494)da bear and a purveyor of great pre-(cid:887)99(cid:886)(cid:495)s music. Please submit answers to cpa questions using this form. Cpa question a: bell manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm"s warehouse capacity. The relevant cash flows for the projects are shown in the following table. First, calculate the irr to the nearest whole percent for each of the projects, using your financial calculator. Answer: both of the projects are acceptable because both irrs are greater than the cost of capital. Answer: project y is preferred because its irr is greater than project x. Benson designs has prepared the following estimates for a long-term project it is considering. The initial investment is ,250, and the project is expected to yield after- tax cash inflows of ,000 per year for 7 years. The firm has a 10% cost of capital. First, determine the net present value (npv) for the project.
