A new hog investment requires an initial outlay of $ 100,000 and is expected to yield annual net cash flows of $17, 700 over the investment's 10-year planning horizon. Assuming no salvage value, no taxes, and a 10% discount rate, and using the NPV, IRR, and MIRR methods, evaluate the investment's profitability. In problem 7, determine how the net present value and internal rate-of-return are influenced by the following financing terms: 20% equity down payment with repayment of the loan balance in eight equal annual principal payments plus interest charged at 8% annually on the outstanding loan balance. Suppose the hog investor is in the 30% tax bracket. How will the tax obligation influence the investment analysis results? A large investment company is analyzing the profitability of a farming investment for one of its corporate clients. The investment requires a $10 million outlay to acquire the necessary assets and is projected to yield an annual payment flow of $2 million (before interest payments) over a 20-year horizon. The analysts figure a 12% cost of equity capital, a 10% cost of debt capital, a 20% salvage value (of the initial outlay), financing by a bond sale at 10% with principal due at the end of the 20th year, and constant financial leverage as indicated by the corporation's equity-to-asset ratio of 0.5. What method would you use to evaluate this investment? Why? Show clearly how you would set up the investment analysis model and show its solution. Explain your procedures for handling the investment's financing plan. Sally Investor is offered the opportunity to invest $10,000 with a promise of receiving $11, 400 one year later. Her response is, "I reject this investment. I have only $2,000 of my own money, and for an $8,000 loan, the bank requires 10% interest, so my net return would be only $10, 600. Would you be satisfied with a 6% return these days?" Did Sally make the right decision? Critique the analytical approach. Two mutually exclusive investments have projected cash flows as follows