A property costs $5 million. It will generate positive cash flows for years 1-15. Cash flow in year 1 is $200,000. Cash flows grow by 20% per year. The property is sold for $5,500,000 at the end of year 15. Your firm will only make real estate investments that offer an internal rate of return greater than 15%. In this case your firm should make the investment.

You are considering opening a new plant. The plant will cost $95.1 million upfront and will take one year to build. After that, it is expected to produce profits of $29.2 million at the end of every year of production. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 7.4 %. Should you make the investment? Calculate the IRR. Does the IRR rule agree with the NPV rule?

You are considering opening a new plant. The plant will cost $104.8 million upfront and will take one year to build. After​ that, it is expected to produce profits of $28.2 million at the end of every year of production. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 7.8%. Should you make the​ investment? Calculate the IRR. Does the IRR rule agree with the NPV​ rule?

2. A firm considers investing in a project. In Year 0 it needs to make an investment of $50,000. If it is expected to earn $50,000, $60,000, $70,000 in years 1,2,3 respectively, decide whether the firm should make the investment. Consider the required rate of return of 8%.   You may use xis to make calculations. Make recommendations for both cases.

You are considering opening a new plant. The plant will cost $95.3 million upfront and will take one year to build. After that, it is expected to produce profits of $30.9 million at the end of every year of production. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 6.9%. Should you make the investment? Calculate the IRR. Does the IRR rule agree with the NPV rule? Here is the cash flow timeline for this problem: Years 0 1 2 3 Cash Flow ($ million) - 95.3 Calculate the NPV of this investment opportunity if your cost of capital is 6.9%. 30.9 30.9 4 30.9 Forever 30.9

4. You have an opportunity to purchase a piece of vacant land for $30,000 cash. If you plan to hold it for 15 years and then sell it at a profit. During this period, you would have to pay annual property taxes of $600 and have no income from the property. Assuming that you would want a 10% rate of return from the investment, a) Draw a cashflow diagram. b) What net price would you have to sell it in the next 15 years?

You run a construction firm. You have just won a contract to build a government office complex. Building it will require an investment of $10.4 million today and $4.8 million in one year. The government will pay you $21.8 million in one year upon the building's completion. Suppose the interest rate is 10.2% a. What is the NPV of this opportunity? b. How can your firm turn this NPV into cash today? a. What is the NPV of this opportunity? The NPV of the proposal is $ million. (Round to two decimal places.)

Your boss is considering investing in a new process. The initial cost of the process is $100,000. The anticipated cash flows of the 8 year project are shown below. If your company borrows money at an interest rate of 6% and the MARR of the project is 15%, determine the rate of return. Is this a good investment? (RoR = 19%) Year 1 2 3 4 7 8 Cash Flow -100,000 36,000 35,000 34,000 33,000 32,000 -25,000 35,000 -25,000

You are considering an investment in a clothes distributer. The company needs $105,000 today and expects to repay you $120,000 in a year from now. What is the IRR of this investment​ opportunity? Given the riskiness of the investment​ opportunity, your cost of capital is 17%. What does the IRR rule say about whether you should​ invest? What is the IRR of this investment oppurtunity? The IRR of this investment opppurtunity is ____%

The owner of a number of gas stations is considering installing coffee machines in his gas stations. It will cost $290,000 to install the coffee machines, and they are expected to boost cash flows by $124,286 per year for their five-year working life. What must the cost of capital be if this investment has a profitability index of 1? O A. 4.69% O B. 5.86% O C. 1.17% O D. 2.34%