Net Present Value Proposal 1: Malaysia call center

Cost of Investment

Annual Cash flow

Number of Periods

Hurdle Rate

PV of Annual Cash Flow

Net Present Value of Investment

Net Present Value Proposal 1: mexico maquilladora

Cost of Investment

Annual Cash flow

Number of Periods

Hurdle Rate

PV of Annual Cash Flow

Net Present Value of Investment

Net Present Value Proposal 1: 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

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 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 patent 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