Last Tuesday, Blue Hamster Manufacturing Inc. lost a portion of its planning and financial data when both its main and its backup servers crashed. The companys CFO remembers that the internal rate of return (IRR) of Project Delta is 11.3%, but he cant recall how much Blue Hamster originally invested in the project nor the projects net present value (NPV). However, he found a note that detailed the annual net cash flows expected to be generated by Project Delta. They are:

CENGAGE MINDTAP Search this course ? Ch 11: Assignment. The Basics of Capital Bargeting The net present value (NPV) and internal rate of return (IRR) methods of investment analysis are interrelated and are sometimes used together to male capital budgeting decisions Consider the case of Blue Hamster Manufacturing Inc.: Last Tuesday, Blue Hamster Manutacturing Inc. lost a portion of its planning and financial data when both its main and its backup servers crashed. The company's CFO remembers that the internal rate of return (IRR) of Project Detais 11.3%, but he can't recall hon much Blue Hamster originally invested in the project nor the project's net present value (NPV). However, he found a note that detailed the analne ceshows expected to be generated by Project Della. They are Year Cash Flow Year: $1,500,000 Year 2 $3,375,000 Year $3,375,000 Year 4 $3,375,000 OIO OIB The CFO has asked you to compute Project Delta's initial investment using the information currently available to you. He has offered the following supyestions and observations . A project's IRR represents the return the project would generate when its NPV is zero or the discounted value of its cash inflows equals the discounted value of its cash outflows-when the cash flows are discounted using the project's RR. . The level of risk endhibited by Project Delta is the same as that exhibited by the company's average project, which means that Project Deltas net cash flows can be discounted using Blue Hamster's 99 WACC. Given the data and hints, Project Della's initial investment is and its NPV is (rounded to the nearest whole dollar A project's IRR will If the project's cash Intlows increase, and everything else is unattected. Grade It Now Save & Continue Continue without saving