Financial Management Midterm Exam (Part 2)
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Part 2 Midterm Exam
- 1.
- A.
A. 5.23 years
- B.
B. 4.86 years
- C.
C. 4.00 years
- D.
D. 6.12 years
- E.
E. 4.35 years
- 2.2. Coughlin Motors is considering a project with the following expected cash flows: Project Year Cash Flow 0 -P700 million 1 200 million 2 370 million 3 225 million 4 700 million The project’s WACC is 10 percent. What is the project’s discounted payback?
- A.
A. 3.15 years
- B.
B. 4.09 years
- C.
C. 1.62 years
- D.
D. 2.58 years
- E.
E. 3.09 years
- 3.3. A project has the following cash flows: Project Year Cash Flow 0 -P3,000 1 1,000 2 1,000 3 1,000 4 1,000 Its cost of capital is 10 percent. What is the project’s discounted payback period?
- A.
A. 3.00 years
- B.
B. 3.30 years
- C.
C. 3.52 years
- D.
D. 3.75 years
- E.
E. 4.75 years
- 4.4. Project A has a 10 percent cost of capital and the following cash flows: Project A Year Cash Flow 0 -P300 1 100 2 150 3 200 4 50 What is Project A’s discounted payback?
- A.
A. 2.25 years
- B.
B. 2.36 years
- C.
C. 2.43 years
- D.
D. 2.50 years
- E.
E. 2.57 years
- 5.
- A.
A. Neither project.
- B.
B. Project X, since it has the higher IRR.
- C.
C. Project Z, since it has the higher NPV.
- D.
D. Project X, since it has the higher NPV.
- E.
E. Project Z, since it has the higher IRR.
- 6.6. An insurance firm agrees to pay you P3,310 at the end of 20 years if you pay premiums of P100 per year at the end of each year for 20 years. Find the internal rate of return to the nearest whole percentage point.
- A.
A. 9%
- B.
B. 7%
- C.
C. 5%
- D.
D. 3%
- E.
E. 11%
- 7.
- A.
A. 23.1%
- B.
B. 143.9%
- C.
C. 17.7%
- D.
D. 33.5%
- E.
E. 41.0%
- 8.
- A.
A. P 13,626.35
- B.
B. P 16,959.00
- C.
C. P 62,050.62
- D.
D. P107,438.02
- E.
E. P121,713.00
- 9.9. Lloyd Enterprises has a project that has the following cash flows: Project Year Cash Flow 0 -P200,000 1 50,000 2 100,000 3 150,000 4 40,000 5 25,000 The cost of capital is 10 percent. What is the project’s discounted payback?
- A.
A. 1.8763 years
- B.
B. 2.0000 years
- C.
C. 2.3333 years
- D.
D. 2.4793 years
- E.
E. 2.6380 years
- 10.10. You are considering the purchase of an investment that would pay you P5,000 per year for Years 1-5, P3,000 per year for Years 6-8, and P2,000 per year for Years 9 and 10. If you require a 14 percent rate of return, and the cash flows occur at the end of each year, then how much should you be willing to pay for this investment?
- A.
A. P15,819.27
- B.
B. P21,937.26
- C.
C. P32,415.85
- D.
D. P38,000.00
- E.
E. P52,815.71
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