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Cato Springs Chemicals International, a batch chemical processing company, is considering acquiring new technology in order to enter a new specialty chemicals market. Three suppliers
Cato Springs Chemicals International, a batch chemical processing company, is considering acquiring new technology in order to enter a new specialty chemicals market. Three suppliers (A. B. and C) of specially designed centrifuges and associated equipment are under consideration. Depending on which supplier is chosen, slightly different markets will be pursued. The forecasts of net cash flows over a 10-year planning horizon for the three alternatives are given below. EOY CFA CFB) CFC) 0 -$7.585,000 -$8,785,000 -$10,285,000 1 -$1.237.500 -$1,250,200 -$1.575.500 2 $1,695,500 $2.056,700 $2.455,700 3 $2.002.800 $2,250,300 $2,657.500 4 $2,345,700 $2,489,000 $2.877.500 5 $2.450.500 $2.675,000 $3,025,000 6 $2.575,600 $3.008,500 $3,250.300 7 $2.735,000 $3.185.900 $3,565.800 8 $3,005,300 $3,258,700 $3,750,000 9 $3,857,500 $4,700,800 $4252,500 10 $5,285,000 $7.885.000 $8.750,000 Parta Your answer is partially correct. Perform an internal rate of return analysis to which, if any.of the mutually exclusive investments should be pursued, using a minimum attractive rate of return of 10%. IRRA should be calculated first: IRR = 19.39%. Therefore, it is acceptable. Next, IRRICI should be calculated: IRR 20.04%. Therefore, it 15 acceptable. Next IRRICO should be calculated: IRR = 18.93 %. Therefore, it 18 acceptable. Round entries to 2 decimal places. The tolerance is 20.02. arred
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