Initial Investment S 1 $ Cash Flows (3,800,000 $ 800,000 $ 1,000,000 $ 1,700,000 $ 2.200,000 $ (4,400,000) 2,300,000 1,900,000 2 (4,000,000) $ 1,200,000 $ 1,400,000 $ 1,500,000 S 1,800,000 $ 10% S payback collections -4,000,000 -3,800,000 -4,400,000 $ (2,800,000) $ (3,000,000) $ (2,100,000) $ (1,400,000) $ (2,000,000) $ (200,000) $ 100,000 $ (300,000) $ 800,000 $ 1,900,000 10% 8% 12% 3 S 1,000,000 800,000 4 $ Std. Deviation of IRR 8% 12% 1. Calculate Payback Period, NPV, IRR, and MIRR for all projects. Which project(s) should the firm accept? Explain in detail the reasons for your recomendation. NPV $577,852.79 $505,938.83 $536,989.39 IRR 16.4% 15.3% 17.1% MIRR 14.0% 13.8% 13.5% Payback 2.93 3.18 2.20 years Correlation with Portfolio Portfolio weight New project Portfolio Std. Deviation IRR C.V. Existing Portfolio 1.00 100% 0% 10% 10% 1.00 0.813 0.50 80% 20% 9.2% Firm Portfolio + Treats Firmn Portfolio + Food Firm Portfolio + Toys 0.50 80% 20% 20% 0.805 11.27% 11.06% 11.41% 8.9% 8.4% 0.00 80% 0.732 I lint: To calculate the standard deviation of a portfolio with two assets use formula 7-5. To calculate portfolio returns and the C.V. use formulas 7-4 and 7-3, respectively. Also, you can look at the same formulas and an example on "Risk and Capital Budgeting" on pages 255-257 in Chapter 10. B) What is your opinion on Max Labs' coefficient of variation and total risk before and after undertaking each project. Initial Investment S 1 $ Cash Flows (3,800,000 $ 800,000 $ 1,000,000 $ 1,700,000 $ 2.200,000 $ (4,400,000) 2,300,000 1,900,000 2 (4,000,000) $ 1,200,000 $ 1,400,000 $ 1,500,000 S 1,800,000 $ 10% S payback collections -4,000,000 -3,800,000 -4,400,000 $ (2,800,000) $ (3,000,000) $ (2,100,000) $ (1,400,000) $ (2,000,000) $ (200,000) $ 100,000 $ (300,000) $ 800,000 $ 1,900,000 10% 8% 12% 3 S 1,000,000 800,000 4 $ Std. Deviation of IRR 8% 12% 1. Calculate Payback Period, NPV, IRR, and MIRR for all projects. Which project(s) should the firm accept? Explain in detail the reasons for your recomendation. NPV $577,852.79 $505,938.83 $536,989.39 IRR 16.4% 15.3% 17.1% MIRR 14.0% 13.8% 13.5% Payback 2.93 3.18 2.20 years Correlation with Portfolio Portfolio weight New project Portfolio Std. Deviation IRR C.V. Existing Portfolio 1.00 100% 0% 10% 10% 1.00 0.813 0.50 80% 20% 9.2% Firm Portfolio + Treats Firmn Portfolio + Food Firm Portfolio + Toys 0.50 80% 20% 20% 0.805 11.27% 11.06% 11.41% 8.9% 8.4% 0.00 80% 0.732 I lint: To calculate the standard deviation of a portfolio with two assets use formula 7-5. To calculate portfolio returns and the C.V. use formulas 7-4 and 7-3, respectively. Also, you can look at the same formulas and an example on "Risk and Capital Budgeting" on pages 255-257 in Chapter 10. B) What is your opinion on Max Labs' coefficient of variation and total risk before and after undertaking each project