Innovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are 54.94 million. The product is expected to generate profits of $1,09 million per year for ten years. The company will have to provide product support expected to cost $93,000 per year in perpetuity. Assume al profits and expenses occur at the end of the year 2. What is the NPV of this investment if the cost of capital is 6.3%? Should the firm undertake the project? Repeat the analysis for discount rates of 1,4% and 15.0% respectively b. What is the IRR of this investment opportunity? e. What does the IRR rule indicate about this investment? CHE a. What is the NPV of this investment if the cost of capital is 6.3%? Should the firm undertake the project? Repeat the analysis for discount rates of 1,4% and 15,0% respectively it the cost of capital is 6.3%, the NPV will be $(Round to the nearest dollar) Should the firm undertake the project? (Select the best choice below.) OA. Yes, because the NPV is equal to or greater than zero. OB. No, because the NPV is less than zero OC. No, because the NPV is not greater than the initial costs. OD. There is not enough information to answer this question When r=14%, the NPV will be $ (Round to the nearest dollar) When re 15.0%, the NPV wl be . (Round to the nearest dolar) b: What is the IRR of this investment opportunity? (Select all the choices that apply) Innovation Company is thinking about marketing a new software product, Upfront costs to market and develop the product are $4.94 million. The product is expected to generate profits of $1,09 million per year for ten years. The company will have to provide product support expected to cost $93,000 per year in perpetuity. Assume all profits and expenses occur at the end of the year. a. What is the NPV of this investment if the cost of capital is 6.3%? Should the firm undertake the projed? Repeat the analysis for discount rates of 1,4% and 150% respectively b. What is the IRR of this investment opportunity? c. What does the IRR rule indicate about this investment? When re 15.0%, the NPV wil be $(Round to the nearest dollar) b. What is the IRR of this investment opportunity? (Select all the choices that apply.) A From the answer to (a) there are at least two IRRs. B. There is at least one IRR between 1.4% and 6.3% C. There is at least one IRR between 6.3% and 15.0% D. There is only one IRR between 1.4% and 50% c. What does the IRR rule indicate about this investment? (Select the best choice below) O A Since at least one of the IRRs is lower than the discount rate, the IRR rule says to not take the project OB. In this case, the IRR rule says you can other take or not take the project OC. Since at least one of the IRRS is higher than the discount rate, the IRR rule says to take the project OD The IRR rule says nothing in this case because there are two IRRS 0
