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Could you help #4,5 Suppose you invest in a project producing $100 mil cash flow in year one, the CF is expect to increase by

Could you help #4,5 image text in transcribed
Suppose you invest in a project producing $100 mil cash flow in year one, the CF is expect to increase by 3% annually and will last forever. The purchase price is $1bil. a. What is the NPV if your hurdle rate is 25%? How about 15%? How about 5%? b. What is your break-even hurdle rate? Consider the following cash flows on two mutually exclusive projects. Both require a 14% annual return. a. Compute the NPV of the projects b. Graph the NPV of both projects over differing required rates, start with 0% and go up to 30% in increments of 5%. Suppose you can purchase an apartment building for $5 mil. The expected life of the building is 20 years and you can depreciate the building, on a straight line basis, over the same period. At the end of its useful life you believe the building will have a salvage value of zero. The building will cost $100,000 per year to maintain and will generate rental revenues of $450,000 per year. There are no additional costs and neither costs nor revenue is expected to increase over the life of the building. Your tax rate is 30%. a. If your cost of capital is 10% should you invest in the building? b. Draw a graph of the NPV of the building at differing costs of capital. Start with 0% and go up to 30% in intervals of 5%. c. What is the break-even cost of capital (i.e. where the present value of the cash flow from the building equals the cost)

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