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Last Tuesday, Green Caterpillar Garden Supplies Inc. lost a portion of its planning and financial data when both its main and its backup servers
Last Tuesday, Green Caterpillar Garden Supplies 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 Zeta is 13.2%, but he can't recall how much Green Caterpillar originally invested in the project nor the project's net present value (NPV). However, he found a note that detailed the annual net cash flows expected to be generated by Project Zeta. They are: Year year Cash Flow $2,400,000 Year 2 $4,500,000 Year 3 $4,500,000 Year 4 $4,500,000 The CFO has asked you to compute Project Zeta's initial investment using the information currently available to you. He has offered the following suggestions and observations A project's IR represents the return the project would generate when its NPV is zers or the decounted value of its cash inflows equals the discounted value of its cash outflows-when the cash flows are discounted using the project's The level of knitted by Project Zata is the same as that exhibited by the company's average project, which means that Project Zata's net cash flows can be discounted using Oreen Caterpitars 7% WACC Increase 4 prints RR w the projects can infs decrease and everything else is unaffected Save & Contine
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