Finance 301S.I. 4/21/08Chpt. 111. What are the five steps to capital budgeting?2. ______________projects have cash flows that are unaffected by theacceptance of each other and therefore, both can be accepted while __________projects whose cash flows can be adversely affected by the acceptance of the other and therefore only one can be accepted.3. What is the difference between normal and non normal cash flows streams? 4. Project A costs $65,000 and has expected cash inflows of $15,000 per year for 10 years. It has a weighted average cost ofcapital of 11%. What is the projects NPV? Should you accept this project based on NPV?5. What is the IRR for project A? Based on the IRR should this project be accepted?6. What is the modified IRR (MIRR) for project A?7. What is project A’s Payback Period?8. What is project A’s Discounted Payback Period? 9. If you are dealing with mutually exclusive projects, and you are evaluating based on NPV, how should you decide which project to take?10. If you are dealing with mutually exclusive projects, and you are evaluating based on IRR, how should you decide which project to take?11. What is an NPV profile?12. When projects are mutually exclusive, what happens to the NPV profiles?13. What are the reinvestment rate assumptions?14. Should you evaluate based on NPV or IRR when you are dealing with mutually exclusive projects?15. What is the
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