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Hindelang Inc. is considering a project that has the following cash flow 



1.	Hindelang Inc. is considering a project that has the following cash flow and WACC data.  What is the project's MIRR?  Note that a project's projected MIRR can be less than the WACC (and even negative), in which case it will be rejected.

WACC:  12.25%
Year		0	1	2	3	4	
Cash flows	-$850	$300	$320	$340	$360

a.	13.42%
b.	14.91%
c.	16.56%
d.	18.22%
e.	20.04%

2.	Stern Associates is considering a project that has the following cash flow data.  What is the project's payback?

Year		0	1	2	3	4	5	
Cash flows	-$1,100	$300	$310	$320	$330	$340

a.	2.31 years
b.	2.56 years
c.	2.85 years
d.	3.16 years
e.	3.52 years


3.	Which of the following statements is CORRECT?

a.	An NPV profile graph shows how a project- payback varies as the cost of capital changes.
b.	The NPV profile graph for a normal project will generally have a positive (upward) slope as the life of the project increases.
c.	An NPV profile graph is designed to give decision makers an idea about how a project- risk varies with its life.
d.	An NPV profile graph is designed to give decision makers an idea about how a project- contribution to the firm- value varies with the cost of capital.
e.	We cannot draw a project- NPV profile unless we know the appropriate WACC for use in evaluating the project- NPV.
	
4.	Which of the following statements is CORRECT?  Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows.

a.	A project- NPV is generally found by compounding the cash inflows at the WACC to find the terminal value (TV), then discounting the TV at the IRR to find its PV.
b.	The higher the WACC used to calculate the NPV, the lower the calculated NPV will be.
c.	If a project- NPV is greater than zero, then its IRR must be less than the WACC. 
d.	If a project- NPV is greater than zero, then its IRR must be less than zero.
e.	The NPVs of relatively risky projects should be found using relatively low WACCs.
	5.	Datta Computer Systems is considering a project that has the following cash flow data.  What is the project's IRR?  Note that a project's projected IRR can be less than the WACC (and even negative), in which case it will be rejected.

Year		0	1	2	3	
Cash flows	-$1,100	$450	$470	$490

a.	9.70%
b.	10.78%
c.	11.98%
d.	13.31%
e.	14.64%



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