could someone help me with my homework, I'm supposed to show all of my work

1. Your brother wants to borrow$10,500 from you. He has offered to pay you back $12,750 in a year. If the cost of capital of this investment opportunity is 8%,what is its NPV? Should you undertake the investment opportunity? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. 2. You are considering investing in a start up company. The founder asked you for $210,000 today and you expect to get $1,020,000 in 11 years. Given the riskiness of the investment opportunity, your cost of capital is 27%. What is the NPV of the investment opportunity? Should you undertake the investment opportunity? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. 3. You are considering an investment in a clothes distributer. The company needs $102,000 today and expects to repay you $125,000 in a year from now. What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your cost of capital is 20%.What does the IRR rule say about whether you should invest? 4. You own a coal mining company and are considering opening a new mine. The mine itself costs $119,000,000 and will generate $22,000,000 for the next 10 years. After that the coal will fun out and the site must be cleaned and maintained for environmental standards. The cleaning and maintenance costs are going to be $1,800,000 per year into perpetuity. What does the IRR rule say about whether you should accept this opportunity? If the cost of capital is 7.9% what does the NPV rule say? a. Accept the opportunity because the IRR is greater than the cost of capital b. The IRR is 12.11% so accept the opportunity c. There are 2 IRR's so you cannot use the IRR as a criterion for accepting the opportunity d. Reject the opportunity because the IRR is lower than the 7.9% cost of capital 5. You are a real estate agent thinking of placing a sign advertising your services at a local bus stop. The sign will cost $10,000 and will be posted for one year. You expect that it will generate additional revenue of $1,300 a month. What is the payback period? 6. You are considering making a movie. The movie is expected to cost $10.3 million upfront and take a year to make. After that, it is expected to make $4.4 million in the first year it is released (end of year 2) and $2.2 million for the following four years (end of years 3 through 6) . What is the payback period of this investment? If you require a payback period of two years, will you make the movie? What is the NPV of the movie if the cost of capital is 10.7%? According to the NPV rule, should you make this movie? 7. You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $10.4 million. Investment A will generate $2.09 million per year (starting at the end of the first year) in perpetuity. Investment B will generate $1.44million at the end of the first year, and its revenues will grow at 2.9% per year for every year after that. a. Which investment has the highest IRR? b. Which investment has the highest s NPV when the cost of capital is 6.7% 8. Consider two investment projects, which both require an upfront investment of $10 million, and both of which pay a constant positive amount each year for the next 88 years. Under what conditions can you rank these projects by comparing their IRRs? a. Ranking by IRR will work in this case so long as the projects have the same risk b. Ranking by IRR will work in this case so long as the projects' cash flows do not increase from year to year. c. Ranking by IRR will work in this case so long as the projects' cash flows do not decrease from year to year. d. There are no conditions under which you can use the IRR to rank projects. 9. AOL is considering 2 proposals. The first bid is from Huawei that will require a $22,000,000 million upfront investment and will generate $20,000,000 in savings for AOL each year for the next 3 years. The 2nd is from Cisco requires an $89,000,000 upfront investment and will generate $60,000,000 in savings each year for the next 3 years. 10. 11. 12. 13. a. What is the IRR for AOL associated with each bid? b. If the cost of capital is 15% what is the NPV for each investment? Under the terms of the lease AOL will pay $21,000,000 and $35,000,000 per year for the next 3 years. AOL's savings will be the same as with Cisco's original bid c. What is the IRR of the cisico bid now? d. What is the new NPV e. What should AOL do? Pisa Pizza, a seller of frozen pizza, is considering introducing a healthier version of its pizza that will be low in cholesterol and contain no trans fats. The firm expects that sales of the new pizza will be $25 million per year. While many of these sales will be to new customers, Pisa Pizza estimates that 28% will come from customers who switch to the new, healthier pizza instead of buying the original version. a. Assume customers will spend the same amount on either version. What level of incremental sales is associated with introducing the new pizza? b. Suppose that 39% of the customers who will switch from Pisa Pizza original to the new healthier pizza will switch to another brand if Pisa Pizza does not introduce a healthier pizza. What level of incremental sales is associated with introducing the new pizza in this case? Cellular Access Inc., is a cellular telephone service provider that reported net operating profit after tax (NOPAT) of $260 million for the most recent fiscal year. The firm had depreciation expenses of $114 million, capital expenditures of $152million, and no interest expenses. Working capital increased by $14million. Calculate the free cash flow for Cellular Access for the most recent fiscal year. A bicycle manufacturer currently produces 200,000 units a year and expects output levels to remain steady in the future. It buys chains from an outside supplier at a price of $2.20a chain. The plant manager believes that it would be cheaper to make these chains rather than buy them. Direct inhouse production costs are estimated to be only $1.60 per chain. The necessary machinery would cost $268,000 and would be obsolete after ten years. This investment could be depreciated to zero for tax purposes using a tenyear straightline depreciation schedule. The plant manager estimates that the operation would require additional working capital of $38,000 but argues that this sum can be ignored since it is recoverable at the end of the ten years. Expected proceeds from scrapping the machinery after ten years are $20,100. If the company pays tax at a rate of 35% and the opportunity cost of capital is 15%, what is the net present value of the decision to produce the chains inhouse instead of purchasing them from the supplier