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9. You need to evaluate whether to invest in the following project and are given the following information about its expected cash flows:- Yeard 02

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9. You need to evaluate whether to invest in the following project and are given the following information about its expected cash flows:- Yeard 02 121 Years 2 to 1004 Cash Flowe Cash flow for the Year -$20 million $04 = $1,000,000 x Year Year 101 onwarda Growing perpetuity with 1st cash flow of $101 million and growth rate of 5% per year (EAR). Your first estimate of the discount rate applicable to this project is 23% but you realize that your estimate could be off by plus or minus 1.5%. If you gather additional data used to determine the rate a more accurate estimate may be obtained note, the additional data would be quite costly. Setup the project in Excel and use Excel to determine the answers to the following questions. There is no need to show work for this question. a. What is the project's payback period? (2 points) b. What is the project's NPV (2 points) c. What is the project's IRR (2 points) d. Based on the above analysis, what should you do? Explain. (4 points) 9. You need to evaluate whether to invest in the following project and are given the following information about its expected cash flows:- Yeard 02 121 Years 2 to 1004 Cash Flowe Cash flow for the Year -$20 million $04 = $1,000,000 x Year Year 101 onwarda Growing perpetuity with 1st cash flow of $101 million and growth rate of 5% per year (EAR). Your first estimate of the discount rate applicable to this project is 23% but you realize that your estimate could be off by plus or minus 1.5%. If you gather additional data used to determine the rate a more accurate estimate may be obtained note, the additional data would be quite costly. Setup the project in Excel and use Excel to determine the answers to the following questions. There is no need to show work for this question. a. What is the project's payback period? (2 points) b. What is the project's NPV (2 points) c. What is the project's IRR (2 points) d. Based on the above analysis, what should you do? Explain. (4 points)

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