Galindo Recovery is considering an expansion project with cash flows of -$287,500, $107,500, $196,100, $104,500, and -$92,700 for Years 0 through 4, respectively. Should the firm proceed with the expansion based on the discounting approach to the modified internal rate of return if the discount rate is 13.4 percent? Why or why not?

For the following levered total cash flow returns, what is the levered NPV, and should you pursue the investment if your levered discount rate is 14%? Year Total Cash Flow (Pre-Tax) $ 31,795; yes 31,795; no x-31,795; yes -31,795; no 0 (400,000) $ 1 30,000 $ 2 30,900 $ 3 4 31,827 $ 32,782 $ 5 533,765

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A project has projected cash flows of -$125,000, $35,000, $50,000, -$10,000 and $100,000 for years 0 to 4, respectively. Should this project be accepted based on the modified internal rate of return if both the finance rate and the reinvestment rate are 10.0 percent? Why or why not? No; The MIRR is 8.67 percent. No; The MIRR is 10.00 percent. Yes; The MIRR is 8.67 percent. Yes; The MIRR is 11.81 percent. No; The MIRR is 11.81 percent. 3

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Newtown Corp. has to choose between two mutually exclusive projects. If it chooses project A, Newtown Corp. will have the opportunity to make a similar investment in three years. However, if it chooses project B, it will not have the opportunity to make a second investment. The following table lists the cash flows for these projects. If the firm uses the replacement chain (common life) approach, what will be the difference between the net present value (NPV) of project A and project B, assuming that both projects have a weighted average cost of capital of 12%?   Cash Flow     Project A   Project B   Year 0: –$15,000 Year 0: –$40,000 Year 1: 9,000 Year 1: 8,000 Year 2: 15,000 Year 2: 15,000 Year 3: 14,000 Year 3: 14,000     Year 4: 13,000     Year 5: 12,000     Year 6: 11,000   $13,512   $11,923   $15,897   $12,718   $10,333     Newtown Corp. is considering a five-year project that has a weighted average cost of capital of…

Ivy's Ice Cream is looking at an opportunity that would require an investment of $900,000 today.  The investment will provide cash flows of $250,000 in the first year, $400,000 in the second year, and $600,000 in the third year.   If the interest rate is 8%, what is the NPV of this investment opportunity?  Should Ivy's Ice Cream move forward with this investment based on the NPV? (Round your answer to the nearest whole dollar.)

You are considering a geographic expansion into the European market for Canopy Pharmaceuticals. Below are the incremental cash flows for the Canopy project for you to use in your analysis. Assume Canopy's marginal tax rate is 35%, their cost of capital is 15.7 %, and an expected growth rate of 5% after 2003. Calculate the NPV, IRR, Payback Period. Explain how do you determining the initial cost and the terminal value? (Using Gordon Model to find the terminal)

A firm is faced with four investment proposals, A, B, C, and D, having the cash flow profiles shown below. Proposals A and C are mutually exclusive, and Proposal D is contingent on Proposal B being chosen. Currently, $750,000 is available for investment and the firm has stipulated a MARR of 10%. Determine which alternative the decision maker should select. Use the internal rate of return method.

WhiteScreen LLC is evaluating Project T, which requires an initial investment of RO 18000.  The expected net cash flows are RO 5000 pa for four years at today’s prices.  However, these are expected to rise by 5.5% pa because of inflation.  The firm’s cost of capital is 15%. What is the NPV for Project T being evaluated by WhiteScreen LLC using the discounting real cash flows?   -1802 -2803 2500 14792