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5. You have been asked to analyze three proposals to improve your company's manufacturing plant. Your predecessor has ranked these proposals by IRR, and recommended
5. You have been asked to analyze three proposals to improve your company's manufacturing plant. Your predecessor has ranked these proposals by IRR, and recommended the highest IRR option. You want do verify the analysis using NPV. However, you are unable to find the complete information for proposal B and there appears to be some question regarding the final cash flow for proposal C. a. Find a good estimate of Year 0 cash flow for proposal B. b. Evaluate all alternatives using a 10% cost of capital. C. Should the possible inaccuracy for the Year 3 cash flow of proposal C be a concern? Why or why not? d. Is rank the proposals by IRR valid? Why or why not? 5. You have been asked to analyze three proposals to improve your company's manufacturing plant. Your predecessor has ranked these proposals by IRR, and recommended the highest IRR option. You want do verify the analysis using NPV. However, you are unable to find the complete information for proposal B and there appears to be some question regarding the final cash flow for proposal C. a. Find a good estimate of Year 0 cash flow for proposal B. b. Evaluate all alternatives using a 10% cost of capital. C. Should the possible inaccuracy for the Year 3 cash flow of proposal C be a concern? Why or why not? d. Is rank the proposals by IRR valid? Why or why not
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