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2400 words required and 1 dear deadline. Please ask suitable price. Questions (2000 words) Estimated cash flows for two proposed projects (project X and Project
2400 words required and 1 dear deadline. Please ask suitable price.
Questions (2000 words) Estimated cash flows for two proposed projects (project X and Project Y) are provided. Project Y comprises adding a new item to the firm's start line. Building up the market for this product will take some time, so the cash inflows increase over time. Project X involves capitalizing on an existing line, and its cash flows decrease over time. Take 3year lives for both projects, as the manufacturing company is in preparation to introduce new brand of products after 3 years. The net cash flows (in thousands of dollars) for the projects is as below. Expected after Tax Net cash flows Year (t) 0 1 2 3 Project X (100) 70 50 20 Project Y (100) 10 60 80 The cash flows include depreciation, net working capital requirements, salvage values, and tax effects. Risk assessments conducted on both projects show that both projects have risk characteristics which are similar to the firm's average project. The company's weighted average cost of capital is 10%. Please determine if one or both of the projects should be accepted. Requisite 1. Evaluate the projects using the following techniques: NPV, payback period, discounted payback period, internal rate of return, and modified internal rate of return. Pinpoint those projects that will lead to the maximization of the firm's stock price. 2. Critically assess the evaluation techniques described above. Discuss the limitations of the techniques and also the social and ethical factors that need to be considered when making capital investment decisionsStep by Step Solution
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