ISU FIN 301 - Worksheet (3 pages)

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Worksheet



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Worksheet

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Pages:
3
School:
Iowa State University
Course:
Fin 301 - Principl of Finance
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Finance 301 S I 4 21 08 Chpt 11 1 What are the five steps to capital budgeting 2 projects have cash flows that are unaffected by the acceptance 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 of capital 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 MIRR


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