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Please answer as many as possible, thank you in advance :) Integrative-Conflicting Rankings The High-Flying Growth Company (HFGC) has been expanding very rapidly in recent
Please answer as many as possible, thank you in advance :)
Integrative-Conflicting Rankings The High-Flying Growth Company (HFGC) has been expanding very rapidly in recent years, making its shareholders rich in the process. The average annual rate of return on the stock in the past few years has been 22%, and HFGC managers believe that 22% is a reasonable figure for the firm's cost of capital. To sustain a high growth rate, HFGC's CEO argues that the company must continue to invest in projects that offer the highest rate of return possible. Two projects are currently under review. The first is an expansion of the firm's production capacity, and the second project involves introducing one of the firm's existing products into a new market. Cash flows from each project appear in the following table: a. Calculate the NPV for both projects. Rank the projects based on their NPVS. b. Calculate the IRR for both projects. Rank the projects based on their IRRS c. Calculate the PI for both projects. Rank the projects based on their Pis d. The firm can only afford to undertake one of these investments What do you think the firm should do? GETD a. The NPV of the plant expansion project is $ (Round to the nearest dollar) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Year Plant expansion Product introduction 0 -$3,800,000 - $400,000 1 $1,500,000 $300,000 2 $2,500,000 $325,000 $2,750,000 $275,000 $2,500,000 $375,000 3 4 - X Step by Step Solution
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