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do all 3 for an automatic thumbs up Your factory has been offered a contract to produce a part for a new printer. The contract
do all 3 for an automatic thumbs up
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $5.23 million per year. Your upfront setup costs to be ready to produce the part would be $8.21 million. Your discount rate for this contract is 8.4% a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in the value of your firm? a. What does the NPV rule say you should do? The NPV of the project is $ million (Round to two decimal places.) Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain her for an upfront payment of $50,000. In return for the next year the firm would have access to eight hours of her time every month. As an alternative payment arrangement, the firm would pay Professor Smith's hourly rate for the eight hours each month. Smith's rate is $540 per hour and her opportunity cost of capital is 15% per year. What does the IRR rule advise regarding the payment arrangement? (Hint: Find the monthly rate that will yield an effective annual rate of 15%.) What about the NPV rule? The annual IRR is 1% (Round to two decimal places.) You have just been offered a contract worth $1.07 million per year for 6 years. However, to take the contract, you will need to purchase some new equipment . Your discount rate for this project is 11.6%. You are still negotiating the purchase price of the equipment. What is the most you can pay for the equipment and still have a positivo NPV? The most you can pay for the equipment and achieve the 11.6% annual return is $million, (Round to two decimal places.) Step by Step Solution
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