Excel to do the calculations. Be sure to write clear steps for your derivations.

4. (20 points) Hollow Truth Publishers is considering whether to launch a new e-magazine. The annual percentage rate of return (APR) on a similar risk project is 8%, the cash flows occur semi-annually (at the end of the 6th and 12th month for each year), and the publishing company requires a payback period of 2 years. The finance department has calculated that the required rate of return for all projects that it will consider is 14%. The costs of the project are: Advertising on various billboards and cable television stations Hollow Truth's headquarters accounting department charges Production costs and employee bonuses Last year's purchase price for the e-magazine's offices Potential rental income from the offices if rented to a 3rd party $200,000 $50,000 $260,000 $470,000 $200,000 a. What are the total relevant costs of the project? Explain why you consider each cost relevant or not for this project. b. Assume the semi-annual cash inflows are $150,000 and $200,000 in year 1, and $250,000 and $200,000 in year 2. Calculate the payback, discounted payback, IRR and MIRR of the project. Based on each criterion, should you accept the project? Why? c. If the project is analyzed using the NPV rule, should you accept the project? Why? What would you do if you believed the semi-annual cash flows had a high degree of uncertainty and could be potentially 15% lower? (You don't have to re-estimate the NPV, just describe what you would do and how you would assess this.) d. If you were the CEO of the firm, would you accept or reject this project? Why