How often NPV, IRR and project evaluation is asked
6 of 6
papers asked it
avg 11 marks · last Oct 2017
Where it was asked
The questions
May/Jun 2014, Q9multiple choice
Juan invests R1 050 000 in the Keep the Ball shop. This investment is expected to generate the following yearly cash flows over the next six years: year 1 - R350 000; year 2 - R320 000; year 3 - R240 000; year 4 - R500 000; year 5 - R80 000; year 6 - R60 000. Determine the internal rate of return (IRR) for this investment.
May/Jun 2014, Q15multiple choice
The only cash outflow for the initial investment made into the Beautiful Me Shop was R400 000. Given that the profitability index for this investment is 1,0875, determine what the net present value (NPV) equals.
May/Jun 2014, Q25multiple choice
The Sit Comfortable Shop has cash flows (in rand) as follows: at year 3, an inflow of 40 000; at year 5, an outflow of 70 000; at year 7, an outflow of 80 000; at year 9, an inflow of 10 000; and at year 11, an inflow of 100 000. Funds can be borrowed at a rate of 14,25% per year, while surplus funds can be invested to earn 8,27% per year. Given that the future value of the cash inflows amounts to R187 253,00, calculate the modified internal rate of return (MIRR).
Oct/Nov 2013, Q23multiple choice
An investment requires an initial outlay of R500 000 and generates five successive annual cash inflows of R75 000, R190 000, R40 000, R150 000 and R180 000 respectively. Calculate the internal rate of return (IRR) of this investment.
Oct/Nov 2013, Q29multiple choice
You must choose between two investments, A and B, whose profitability index (PI), net present value (NPV) and internal rate of return (IRR) are as follows: for Investment A, NPV is 44 000, PI is 1,945 and IRR is 16,00%; for Investment B, NPV is −22 000, PI is 0,071 and IRR is 8,04%. Taking all three criteria into account, and given a cost of capital of 12% per year, determine which investment(s) you should choose.
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