## NPTEL Project Management Week 6 Assignment Answers 2024

1. Mr. Banerjee purchased an asset for Rs.120,000. The following cash flow is generated by the asset:

Using a discount rate of 20% the discounted payback period would be:

- 6 years
- 4 years
- The investment does not pay back
- 5 years

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2. Answer question 2 â€“ 4 based on the information given below.

Table below shows the information related to a project that involves the merger of two marketing firms (in days).

What is the critical path?

- Start-B-D-G-I-J-Finish
- Start-A-C-E-I-J-Finish
- Start-B-D-E-I-J-Finish
- Start-A-C-E-H-Finish

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3. What is the project completion duration?

- 58 days
- 57 days
- 55 days
- 56 days

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4. If there is an option to delay one activity without delaying the entire merge project, which activity would you delay?

- Activity A
- Activity B
- Activity A and Activity C
- None of these

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5. NPTEL Ltd. is discussing with a local entrepreneur to start a project, which required an initial investment of Rs. 300,000. The project starts and the cash-flows during the following years are as follows:

If a discount rate of 10% is used to calculate the NPV of the project, which of the following statements is correct? (Assume the cash flows arise at the end of each year.)

- The project will yield a positive NPV of Rs.65.5k and have a payback period of 2 years and 3 months.
- The project will yield a positive NPV of Rs.65.5k and have a payback period of 2 years and 9 months.
- The project will yield a positive NPV of Rs.365.5k and have a payback period of 2 years and 3 months.
- The project will yield a positive NPV of Rs.365.5k and have a payback period of 2 years and 9 months.

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6. A project has the following cash flows:

What is the internal rate of return of this project (approx.)?

- 17%
- 11%
- 15%
- 13%

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7. The yield of the project (y) is **_______________**.

- the discount rate that makes the present value of the cash flows of the project equal to the NPV of the project.
- the discount rate that makes the present value of the cash flows of the project equal to the face value of the project.
- the discount rate that makes the present value of the cash flows of the project equal to the discount price of the project.
- the discount rate that makes the present value of the cash flows of the project equal to the market price of the project.

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8. The par yield of the project (c)for a certain maturity is **_______________**.

- the rate that causes the project to equal its NPV.
- the rate that causes the project price to equal its face value.
- the rate that causes the project to equal its discounted price.
- the rate that causes the project to equal its Market Price of the project.

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9. NPTEL Ltd. is considering two mutually exclusive projects. Project A has an internal rate of return (IRR) of 12 percent, while Project B has an IRR of 14 percent. The two projects have the same risk, and when the cost of capital is 7 percent the projects have the same net present value (NPV). Assume each project has an initial cash outflow followed by a series of inflows. Given this information, which of the following statements is most correct?

- If the cost of capital is 13 percent, Project B’s NPV will be higher than Project A’s NPV.
- If the cost of capital is 9 percent, Project B’s NPV will be higher than Project A’s NPV.
- If the cost of capital is 9 percent, Project B’s modified internal rate of return (MIRR) will be less than its IRR.
- All of the statements above are correct.

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10. Tata Industry is considering a new project that develops a new iron pigment, PRISTINE. The company has estimated that the project’s NPV is Rs.3 million, but this does not consider that the new pigment will reduce the revenues received on its existing pigment products. Specifically, the company estimates that if it develops PRISTINE the company will lose Rs. 500,000 in after-tax cash flows during each of the next 10 years because of the cannibalization of its existing products. Tata Industry’s WACC is 10 percent. What is the net present value (NPV) of undertaking PRISTINE after considering externalities?

- Rs. 2,927,716.00
- Rs. 3,000,000.00
- Rs. (-72,283.55)
- Rs. 2,807,228.00

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