P7-19 (similar to)Question HelpYour firm has been hired to develop new software for the university's class registration system. Under the contract, you will receive $506,000 as an upfront payment. You expect thedevelopment costs to be $444,000 per year for the next 3 years. Once the new system is in place, you will receive a final payment of $866,000 from the university 4 years from now.a. What are the IRRs of this opportunity? (Hint: Build an Excel model which tests the NPV at 1% intervals from 1% to 40%. Then zero in on the rates at which the NPV changes signs.)b. If your cost of capital is 10%, is the opportunity attractive?Suppose you are able to renegotiate the terms of the contract so that your final payment in year 4 will be $1.2 million.c. What is the IRR of the opportunity now?d. Is it attractive at the new terms?a. What are the IRRs of this opportunity? (Hint: Build an Excel model which tests the NPV at 1% intervals from 1% to 40%. Then zero in on the rates at which the NPV changes signs.)The IRRs of the project in ascending order are% and%. (Round to two decimal places.)

The internal rate of return represents the rate at which the project or investment will yield a zero…

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Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 4TIF

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On September 1, 2014, a university received a grant of $100,000 from Tajinder. The money is invested at 8% compounded quarterly. The grant is to be used to pay out semi-annual scholarships for 20 years. What is the size of each scholarship if the first one is awarded on September 1, 2016? Need well explained answer, please do not use excel.
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On September 1, 2014, a university received a grant of $100,000 from Tajinder. The money is invested at 8% compounded quarterly. The grant is to be used to pay out semi-annual scholarships for 20 years. What is the size of each scholarship if the first one is awarded on September 1, 2016? Need well explained answer, please do not use excel.
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