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An investment project requires an immediate investment of $38 million. In return, it pays $4 million in the year 1, with cash flows increasing by
An investment project requires an immediate investment of $38 million. In return, it pays $4 million in the year 1, with cash flows increasing by 2.5% per year after that and lasting forever. The market interest rate is 12%. Compute the NPV of the project. Should the company take it? OA. -$5.12 million; No, the company shouldn't take it. B. $6.53 million; Yes, the company should take it. OC.-$2.19 million; No, the company shouldn't take it. D. $4.11 million; Yes, the company should take it. Use the information provided in Q5: Compute the IRR of the project. Should the company take the project? A. IRR = 11.26% 2.5%; Yes, the company should take it. C. IRR = 13.03% > 12%; Yes, the company should take it. > D. IRR = 10.53% > 2.5%; Yes, the company should take it
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