: Google LLC Scenario: Capital Budgeting Decision Data: Google LLC is considering a new project with an
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Question:
- : Google LLC
Scenario: Capital Budgeting Decision
Data: Google LLC is considering a new project with an initial investment of $10,000,000. The project is expected to generate annual cash flows of $3,000,000 for the next 5 years. Google LLC's required rate of return is 12%.
Requirements:
- Calculate the net present value (NPV) of the project.
- Determine the internal rate of return (IRR) of the project.
- Discuss the importance of NPV and IRR in capital budgeting decisions for Google LLC.
- Analyze whether Google LLC should accept or reject the project based on NPV and IRR.
- Evaluate the sensitivity of the project's NPV to changes in cash flow estimates.
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