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I understand Chegg's policy of 2 questions per post, but these 4 questions go with this scenario. Please consider the following information for the next
I understand Chegg's policy of 2 questions per post, but these 4 questions go with this scenario.
Please consider the following information for the next 4 questions. Genentech Inc. is considering a capital expansion project. The initial investment of undertaking this project is $198,500. This expansion project will last for five years. The net operating cash flows from the expansion project at the end of year 1, 2, 3, 4 and 5 are estimated to be $38,500, $58,780, $78,960, $91,680 and $100,380 respectively. Genentech has a weighted average cost of capital of 22%. Question 13 (3.33 points) Based on Genentech's weighted average cost of capital, what is the NPV of undertaking this expansion project? That is, what is the NPV if the weighted average cost of capital is used as the discount rate? Shall Genentech undertake the investment project? O NPV=$169,800.00. Genentech shall undertake the investment project since NPV>0. ONPV=-$4,460.61. Genentech shall not undertake the investment project since NPV0. O NPV=-$5,441.94. Genentech shall not undertake the investment project since NPV1. OPI= 0.97. Genentech shall not undertake the investment project since Pl1. Question 15 (3.33 points) What is the internal rate of return (IRR) if Genentech undertakes this project? Based on the IRR, shall Genentech undertake this investment project assuming the weighted average cost of capital is the appropriate discount rate for the capital budgeting problems considered. O IRR=24.02%. Genentech shall undertake the investment project since IRR>WACC. O IRR=19.39%. Genentech shall not undertake the investment project since IRRStep by Step Solution
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