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Alphabet Inc., the parent company of Google, is contemplating a major capital investment in a new research and development project. The project requires an initial
Alphabet Inc., the parent company of Google, is contemplating a major capital investment in a new research and development project. The project requires an initial investment of $10,000,000 and is expected to generate annual cash flows of $3,000,000 for the next five years. Conduct a comprehensive investment analysis:
- Calculate the project's net present value (NPV) and determine its feasibility based on the company's required rate of return.
- Assess the project's internal rate of return (IRR) and compare it with Alphabet's cost of capital to ascertain its attractiveness.
- Perform sensitivity analysis to evaluate the project's resilience to changes in key assumptions such as cash flow projections and discount rates.
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