Course Project: Part One

Assume you were hired at a rapidly growing company, InGen. The company has just received a large cash inflow from the sale of a building it no longer utilized. The owners want redeploy capital to the best investment opportunities that can create value. The organization doesn$$t know how much money it needs to invest today to meet its projected financing needs of $$200$ million in two years.

$1.$ How much money does the company need to invest today to have $$200$ million dollars in two years? Knowing the expected return is a forecast and can vary, include a best, and worst case estimate in addition to your original estimate.

a$.$ Assume an expected rate of return of $12\%.$

b$.$ Assume the expected return will vary $3\%$ up in the best of circumstances and $-3\%$ in the worst of circumstances.

$2.$ Calculate the NPV and IRR for the following projects.

$3.$ Calculate how much must revenue be to avoid loses for each project? $($Break$-$even Point$)$

$4.$ Calculate the impact a $1\%$ increase and decline in revenue would have on the projects estimated NPV$.$

$5.$ Recommend which project$($s$)$ the company should select to create the most value for the least risk possible. Support your recommendation with analysis. Include specific numbers.