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 125 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 20 years Estimated annual cash flow 1,200,000.00 Estimated annual net income 1,000,000.00 Estimated salvage value 200,000.00 Proposal 2: Mexico maquilladora Cost 10,000,000.00 Estimated useful life 18 years 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 potent Cost 10,000,000.00 Estimated useful life 15 years Estimated annual cash flow 1,600,000.00 Estimated annual net income 1,500,000.00 Estimated salvage value 15 Homeworks ca Com w Prop Mai Cast of Cab co Cost Per 15 Multi - WWW ir Lovecraft Inc. is considering three different investment proposals. 4 They will invest cash from their accululated free cash flow and thus, will not need to borrow. 5 Lovecraft's hurdle rate for investments is 12%. 6 Calculate the payback period, ARR, NPV, and IRR for each of the proposals. 7 Proposal 1: Malaysia call center 8 Cost 10,000,000.00 9 Estimated useful life 20 years 10 Estimated annual cash flow 1,200,000.00 11 Estimated annual net income 1,000,000.00 12 Estimated salvage value 200,000.00 13 Proposal 2: Mexico maquilladora 114 Cost 10,000,000.00 15 Estimated useful life 18 years 116 Estimated annual cash flow 1,500,000.00 17 Estimated annual net income 1,350,000.00 118 Estimated salvage value 500,000.00 19 Proposal 3: Acquisition of a competitor's patent 20 Cost 10,000,000.00 21 Estimated useful life 15 years 22 Estimated annual cash flow 1,600,000.00 23 Estimated annual net income 1,500,000.00 24 Estimated salvage value 25 26 311 Homework 15 Payback Period Proposal 1: Malaysia call center Cost of investment Annual Cash Flows Payback Period Calculations Calculations Galati Proposal : Miako maquilladors Cost of investment Anal Crows Payback Prod Proposal of a compra Coro Au Chow Payti Calculation Calculations Callation 311 Homework 15 Accounting rate of Heturn Proposal 1: Malaysia call center Cont of travestment Savige Value Annual Net income Average Anwenant ARR Proposal Music maquiladora Cost of investment Savu Anna Net income Average Annement AR Propouljitione competitor's putem Cost of investment Salve income A Annual invest AR