Consider a project with the following cash flows: Year 0 Year 1 -1000 1000 Year 2 1000 Year 3 -800 Project D The cash flows are negative in the last period because of decommissioning costs. i.) Write an equation that a good calculator or computer might be able to solve to calculate the IRR (but do not solve it). ii.) Two of your associates have gotten into a fist-fight over the IRR of the project in (i). One claims it is 29.519270%, way above the relevant cost of capital, so that the company should take the project. The other claims it is -34.793795%, way below the relevant cost of capital, so the company should reject the project. What happens when you plug these values into your equation from (i)? Is one of the associates right? What does this imply about the IRR rule?

Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

Overall, you should find conflicting recommendations based on the various criteria. Why is this occuring?

TLT Ltd is considering the purchase of a new machine for use in its production process. Management has developed three alternative proposals to help evaluate the machine purchase. Only one of these proposals can be implemented. Proposals A and B both have the same cost to set up, but the output from proposal A (as measured by future net cash flows) commences at a high rate and then declines over time, while Proposal B starts at a low rate and then increases over time. Proposal C involves buying two of the machines considered under proposal B. That is, proposal C is simply Proposal B scaled by a factor of two. Proposal C results in net cash flows which are similar in magnitude to proposal A's net cash flows in the first two years. The estimated net cash flows, internal rates of return and net present values at 9% and 11% for each proposal are given in the following table. Proposal A -$290,000 $100,000 $90,000 Proposal B -$290,000 $40,000 $50,000 Proposal C -$580,000 $80,000 $100,000 End…

makabhai    this problem, given the same data has several different answers for the NPV. Please show in excel with formulas that correct answer.   TexMex Food Company is considering a new salsa whose data are shown below. The equipment to be used would be depreciated by the straight-line method over its 3-year life and would have a zero salvage value, and no new working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. However, this project would compete with other TexMex products and would reduce their pre-tax annual cash flows. What is the project's NPV? WACC 10.0% Pre-tax cash flow reduction for other products (cannibalization) -$5,000 Investment cost (depreciable basis) $80,000 Straight-line deprec. rate 33.333% Sales revenues, each year for 3 years $67,500 Annual operating costs (excl. deprec.) -$25,000 Tax rate 35.0%

Cullumber Clinic is considering investing in new heart-monitoring equipment. It has two options. Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 4 years. Option B would require no rebuilding expenditure, but its maintenance costs would be higher. Since the Option B machine is of initial higher quality, it is expected to have a salvage value at the end of its useful life. The following estimates were made of the cash flows. The company's cost of capital is 5%. Initial cost Annual cash inflows Annual cash outflows Cost to rebuild (end of year 4) Salvage value Estimated useful life Click here to view the factor table Your answer is partially correct Option A Option B Option A $170,000 $70,200 $30,700 $49,000 $ Compute the (1) net present value. (2) profitability index, and (3) internal rate of return for each option. (Hint: To solve for internal rate of return, experiment with alternative discount rates to arrive at a net present…

IRR of an uneven cash flow stream) Microwave Oven Programming in comidering the construction of a new plant. The plant will have an intal cash oulay of 16 1 milion (= $61 milion) and will produce can fows of 57 9 month and of year 1, 157 milion at the end of your 2, and $15 million at the end of years 3 through 5 What is the internal cale of retam on th The Wd of the project is (ound to two decinal places)

Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. WACC: 9.25% CFS CFL 1 2 3 4 -$1,200 $405 $405 $405 $405 -$2,400 $780 $780 $780 $780 0 a. $0.00 b. $210.59 c. $120.02 d. $8.26 e. $7.56