Scribd
Upload
460 views1 page

Time Value Practice

This document provides cash flow information over 6 time periods for a capital budgeting problem. It asks for the payback period, net present value (NPV) at an 8% discount rate, and internal rate of return (IRR) for another cash flow scenario. Multiple choice questions are also provided to calculate present values using the given table at different discount rates.

Uploaded by

ssregens82
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
460 views1 page

Time Value Practice

This document provides cash flow information over 6 time periods for a capital budgeting problem. It asks for the payback period, net present value (NPV) at an 8% discount rate, and internal rate of return (IRR) for another cash flow scenario. Multiple choice questions are also provided to calculate present values using the given table at different discount rates.

Uploaded by

ssregens82
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 1

Capital Budgeting Practice

Cash flows for an investment are as follows:


Time point
0
1
2
3
4
5
6

Amount of flow
- 5,000
+ 1,500
+ 1,300
+ 1,400
+ 1,200
+ 1,000
+ 1,000

What is the payback period?

For the problem data above, what is the NPV if the opportunity interest rate is 8%?

What is the IRR if the opportunity interest rate is 10% for these flows
at time points 0, 1, 2, and 3, respectively -200, +80, +80, +80?

A.
B.
C.
D.

3 1/2
4
3 2/3
3 3/4

A.
B.
C.
D.

1,207
2,400
7,400
808

A.
B.
C.
D.

11.0%
9.7%
8.5%
5.0%

A present value table is provided for use in answering questions 4 and 5.


The Present Value of $1 Due in N Periods
N
6%
8%
10%
1
0.943
0.926
0.909
2
0.890
0.857
0.826
3
0.840
0.794
0.751
4
0.792
0.735
0.683
5
0.747
0.681
0.621
6
0.705
0.630
0.564

1/9/2014

12%
0.893
0.797
0.712
0.636
0.567
0.507

14%
0.877
0.769
0.675
0.592
0.519
0.456

16%
0.862
0.743
0.641
0.552
0.476
0.410

You might also like