22.

25.

Nor Drilling Inc. is considering Projects S and I, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO believes the IRR is the best selection criterion, while the CFO advocates the MIRR. If the decision is made by choosing the project with the higher IRR rather than the one with the higher MIRR, how much, ilony, value will be forgone, i.o., what's the NPV of the chosen project verses the maximum possible NPV? Note that (1) true value" is measured by NPV, and (2) under some conditions the choice of IRR vs. MIRR will have no effect on the value lost, WACC 10.5096 0 3 4 1 5590 CFS CFL -51,200 52,950 $322.54 2 $610 SB15 $170 $860 $170 51,650 5815 O 0.5291.89 5113.67 d. 50.00 5125.60 een ky Golsen Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The assets required for the project were fully deprecated at the ime of purchase. The financial staff has collected the following information on the project: Sales revenues $25 million Operating costs 22.5 million Interest expense 3 million The company has a 25% tax rate, and its WACC is 14% Write out your answers completely. For example, 13 million should be entered as 13,000,000 a. What is the project's operating cash flow for the first year (t = 1)? Round your answer to the nearest dollar. 5 b. If this project would cannibalize other projects by $1.5 million of cash flow before taxes per year, how would this change your answer to part a7 Round your answer to the nearest dollar The firm's OCF would now be $