D practice questionpdt - Google Chrome X E https://wattlecourses.anu.eduiau/p|uginfile.php/18411SO/modiresource/content/1/practice%20question,pdf Q practice questionipdf Part One 1. You have just started your summer internship, and your boss asks you to review a recent analysis that was done to compare three alternative proposals to enhance the rm's manufacturing facility. You nd that the prior analysis ranked the proposals according to their IR, and recommended the highest IRR option, Proposal A. You are concerned and decide to redo the analysis using NPV to determine whether this recommendation was appropriate. But while you are condent the IRS were computed correctly, it seems that some of the underlying data regarding the cash ows that were estimated for each proposal was not included in the report. For Proposal B, you cannot nd information regarding the total initial investment that was required in year 0. And for Proposal C, you cannot nd the data regarding additional salvage value that will be recovered in year 3. Here is the information you have: Proposal IRR Year 0 Year 1 Year 2 Year 3 A 60.0% 100 30 153 88 B 55.0% ? 0 206 95 C 50.0% 100 37 O 204 + ? Suppose the appropriate cost of capital for each alternative is 10%. Using this information, determine the NPV of each project. Which project should the rm choose? Why is ranking the projects by their IRR not valid in this situation? 4:04 PM E 30/10/2018 4