American Rubber Company is planning to invest in a new assembly plant in Akron, Ohio. The plant requires an initial cash outlay of $100,000,000 dollars. Cash flows from operations are expected to be $30,000,000 every year for the next eight (8) years at which time the plant will be disposed generating a terminal cash inflow of $20,000,000. If American Rubber Company's required rate of return for projects of similar risks is 18% 16 Calculate the project's Net Present Value a. 32,327,185 31,060,125 29,373,076 27,647,736 17 Calculate the project's Internal Rate of Return a. 27.25% 26.13% 25.04% 24.39% 18 Calculate the project's Payback Period a 6.5 Years 5.25 Years 3.33 Years 2.25 Years An investor is interested in purchasing a new delivery vehicle. The vehicle requires an initial cash outlay of $100,000 and is expected to bring in net cash inflows of $25,000 every year for the next five) years at which time is will be sold for $50,000. The investor uses a required rate of return of 10%. 19 The project's payback period is a. 2 Years 4 Years c. 6 years d. 8 Years 20 Calculate the discounted value of all expected cash flows from operations (value this investment) a. 100,251.52 125,815.74