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5. You are given the following data for year-1. Revenue = $43; Total costs = $30;
Depreciation = $3; Tax rate = 30%. Calculate the operating cash flow for the project for year-
1.
A. $7
B. $10
C. $13
D. None of the above
6. A project has an initial investment of 100. You have come up with the following estimates
of the projects with cash flows.
If the cash flows are perpetuities and the cost of capital is 10%. What does a sensitivity
analysis of NPV (no taxes) show?
A. -50, 20, +100
B. -100, -50, +80
C. -50, +50, +70
D. None of the above
7. You are given the following data for year-1: Revenues = 100, Fixed costs = 30; Total
variable costs = 50; Depreciation = $10; Tax rate = 30%. Calculate the after tax cash flow for
the project for year-1.
A. $17
B. $7
C. $10
D. None of the above
8. A project has the following cash flows: C0 = -100,000; C1 = 50,000; C2 = 150,000; C3 =
100,000. If the discount rate changes from 12% to 15%, what is the change in the NPV of the
project (approximately)?
A. 12,750 increase
B. 12,750 decrease
C. 122,650 increase
D. 135,400 decrease
20. Firms often calculate a project's break-even sales using book earnings. Generally, break-
even sales based on NPV is:
A. Higher than the one calculated using book earnings
B. Lower than the one calculated using book earnings
C. Equal to the one calculated using book earnings
D. None of the above
32. After the completion of project analysis, the final decision on the project would be from:
A. Sensitivity analysis
B. Break-even analysis
C. Decision trees
D. NPV