please show all work. DO NOT use excel to solve!!

Chapter 9 Problem Set: 1. What is the payback period for the following cash ows? Cash Flow - 17 600 l 900 2 900 2 300 2. An investment project has the following cash ows as shown in the table below. The company's discount rate is 14%. What is the discounted payback period for these cash ows if the initial cost is $2M; $14007; $10,400? 3. You've been asked to determine whether to expand your business by building a new manufacturing plant. The plant's installation cost is $15 mil which is to be depreciated straight-line over its m life. The new plant has projected net income over the next four years of $1,754,000; $1,820,500; $1,716,300; and $1,097,000. If the company's AAR hurdle is 20%, should you recommend proceeding with the project? 7-1 Chapter 09 - Net Present Value Analysis Garage Inc. has identified the following two mutually exclusive (i.e. it can only do one or the other but not both) projects with cash flows as outlined below. Year Cash Flow (A) Cash Flow (B) 0 -$43,500 $43,50 21,400 6,400 2 8,500 14,700 3 3,800 22,800 7,600 25,200 a) What is the IRR for each project? Using the IRR decision rule, which project should the company select? IS this necessarily correct? b) If cost of capital (e.g. required return hurdle rate) is 11%, what is the NPV for each of these projects? Using the NPV rule, which project would the company select? 5. Megadeth Inc. is considering expanding its local private cemetery business nation-wide. According to co-CEOs Dave Mustaine and David Ellefson, the business is "looking up". The expansion will provide a net cash inflow of $127,000 during the first year. Messrs. Mustaine and Ellefson expect cash flows to increase 4% per year indefinitely citing the rationale that ".. .death is a growing business". The project requires an initial investment of $1,700,000. a) If Megadeth Inc. requires an 11% hurdle rate for such undertakings, should they proceed with the private cemetery project? b) Megadeth's CFO, Kiko Loureiro, is somewhat unsure about the 4% perpetual growth rate and asks you to determine the break-even growth rate based on the 11% hurdle rate. A project has the following cash flows shown in the table below. What is the IRR? If the company's hurdle rate is 12% should it proceed with the project? What is happening here? Year Cash Flow 0 $53,000 29,000 2 -37,000