Instructions: Lovecraft Inc. is considering three different investment proposals. They will invest cash from their accululated free cash flow and thus, will not need to borrow. Lovecraft's hurdle rate for investments is 12%. Calculate the payback period, ARR, NPV, and IRR for each of the proposals. Proposal 1: Malaysia call center Cost 10,000,000,00 Estimated useful life: Estimated annual cash flow 1,200,000,00 Estimated annual net income 1,000,000.00 200,000.00 Estimated salvage value Proposal 2: Mexico maquilladora Cost 10,000,000.00 Estimated useful life Estimated annual cash flow 1,500,000.00 Estimated annual net income 1,350,000.00 Estimated salvage value 500,000.00 Proposal 3: Acquisition of a competitor's patent Cost 10,000,000.00 Estimated useful life Estimated annual cash flow 1,600,000.00 1,500,000.00 Estimated annual net income Estimated salvage value 20 years 18 years 15 years 311 Homework 15 Net Present Value Cost of Investment Annual Cash flow Number of Periods Hurdle Rate PV of Annual Cash Flow Net Present Value of Investment Proposal 1: Malaysia call center Calculations Proposal 2: Mexico maquilladora Cost of investment Annual Cash flow Number of Periods Hurdle Rate PV of Annual Cash Flow Net Present Value of Investment Calculations Proposal 3: Acquisition of a competitor's patent Cost of Investment Annual Cash flow Number of Periods Hurdle Rate PV of Annual Cash Flow Net Present Value of Investment Calculations 311 Homework 15 Net Present Value Cost of Investment Annual Cash flow Number of Periods Hurdle Rate PV Factor IRR from chart IRR using RATE formula Proposal 1: Malaysia call center Calculations Proposal 2: Mexico maquilladora Cost of Investment Annual Cash flow Number of Periods Hurdle Rate PV Factor IRR from chart IRR using RATE formula Calculations Proposal 3: Ace Cost of investment Annual Cash flow Number of Periods Hurdle Rate : PV Factor IRR from chart IRR using RATE formu Calculations Proposal 3: Acquisition of a competitor's patent Cost of Investment Annual Cash flow Number of Periods Hurdle Rate PV Factor IRR from chart IRR using RATE formula Calculations