Payback Period Assignment | Homework for You

Case “Cam Reddish” Inc
“Cam Reddish” Inc. finances its three projects X, Y & Z with a WACC of 10 percent.
The firm offered a project “X” with the following cash flows:

Year Cash Flows
0 ($8,000)
1 $4,100
2 $3,600
3 $4,700

The company is thinking also of another two projects “Y” & “Z” with the following information:
Project Y Z
NPV $2,789.50 $453.00
MIRR 18.25% 9.55%
IRR 16.25% 8.56%
Discounted Payback Period 2.44 years 5.33 Year

1. NPV for “X” is:
$4,400.00
$2,233.66
$3,100.55
$20,400.00
MIRR for “X” is:
11.00%
19.41%
8.88%
15.64%
Payback Period for “X” is:
1.94 years
2.37 years
2.06 years
3.00 years
Discounted payback period for “X”:
2.06 years
1.64 years
2.37 years
3.00 years
5. Assuming the three project X, Y & Z are independent then based on NPV criteria we can choose:
X, Y & Z
X & Z
Only X
Only Y

6. Assuming the three project X, Y & Z are Mutual Exclusive then based on NPV criteria we can choose:
X, Y & Z
X & Z
Only X
Only Y
7. Assuming the three project X, Y & Z are independent then based on MIRR criteria we can choose:
X, Y & Z
X & Y
Only X
Only Z
8. Assuming the three project X, Y & Z are Mutual Exclusive then based on MIRR criteria we can choose:
X, Y & Z
X & Y
Only X
Only Z
9. If IRR for “X” is 17.95%, and the three project X, Y & Z are Independent then based on IRR criteria we can choose:
X, Y & Z
X & Y
Only X
Only Y
10. Based on Discounted Payback Period we should choose:
Only X
Only Y
Only Z
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