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As a separate project ( Project P ) , the firm is considering sponsoring a pavilion at the upcoming World s Fair. The pavilion s

As a separate project (Project P), the firm is considering sponsoring a pavilion at the upcoming Worlds Fair. The pavilions initial outlay at T =0 Is $800,000, and it is expected to result in $5 million of incremental cash inflows during its 1 year of operation. However, it would then take another year and a $5 million cash outflow to demolish the site and return it to its original condition. Thus, Project Ps expected cash flows (in millions of dollars) look like this:The project is estimated to be of average risk, so its WACC is 10%.
1) What is Project Ps NPV? What is its IRR? Its MIRR? 2) Draw Project Ps NPV profile. Does Project P have normal or nonnormal cash flows? Should this project be accepted? Explain.
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