project

1. A company is evaluating a project with the following projected cash flow characteristics. Calculate the NPV, IRR and Payback period. Assume the company requires a return greater than 9% for this project to undertake it. Based on your findings should the company undertake the project? Explain. Year Annual Payment 0 ($75,000) 1 $5,0002 $25,0003 $25,0004 $10,0005 $50,0006 $40,000 $108,365.26 $33,365.36 20% 2. A company is evaluating between two mutually exclusive projects. The estimated cash flows are indicated below. Calculate the NPV and IRR for both projects. The discount rate related to Project A is 12% and the discount rate related to Project B is 16%. Assuming the company is trying to maximize NPV which project should it undertake? Assume the company is trying to maximize the IRR, which project should it undertake? Year Project A Project A 0 ($100,000) ($5,000) 1 $0 $02 $0 $7,5003 $0 $04 $0 $05 $0 $06 $250,000 $03. “Below are the relevant financial statement details of a project.a. Assuming a tax rate of 40% calculate the projected cash flows. (The project has no debt.)b. If the company requires a rate of return of at least 12% should it accept this project?c. Assume the Operating Expense increases by 10% in each year. Should the company accept the project then?” Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Revenues $250,000 $275,000 $300,000 $325,000 $350,000Operating Expenses ($150,000) ($165,000) ($180,000) ($195,000) ($210,000) SG&A ($20,000) ($22,000) ($24,200) ($26,620) ($29,282) Depreciation Expense ($50,000) ($50,000) ($50,000) ($50,000) ($50,000) Investments in equipment ($250,000) $0 $0 $0 $0 $0Investment in working capital ($25,000) ($2,500) ($2,500) ($2,500) ($2,500) $25,000