Present Value of $1 Present Value of Annuity of $1.00 in Arrears 2. Assume the finance manager of Lilly is unsure about the cash revenues and costs. The revenues could be anywhere from 10% higher to 10% lower than predicted. Assume cash costs are still $16,000 per year. What are NPV and IRR at the high and low points for revenue? 3. The finance manager thinks that costs will vary with revenues, and if the revenues are 10% higher, the costs will be 7% higher. If the revenues are 10% lower, the costs will be 10% lower. Recalculate the NPV and IRR at the high and low revenue points with this new cost information. 4. The finance manager has decided that the company should earn 2% more than the cost of capital on any project. Recalculate the original NPV in requirement 1 using the new discount rate and evaluate the investment opportunity. 5. Discuss how the changes in assumptions have affected the decision to expand. Requirement 1. Calculate the net present value and internal rate of return for this investment. parentheses for a negative net present value.) The net present value is X.XX%.) The internal rate of return (IRR) is %. points for revenue? dollar. Use a minus sign or parentheses for a negative net present value.) The net present value (NPV) at the high point for revenue is nearest hundredth percent, X.XX%.) The internal rate of return (IRR) at the high point for revenue is %. Use a minus sign or parentheses for a negative net present value.) The net present value (NPV) at the low point for revenue is hundredth percent, X.XX%.) The internal rate of return (IRR) at the low point for revenue is %. this new cost information. dollar. Use a minus sign or parentheses for a negative net present value.) The net present value (NPV) at the high point for revenue is this new cost information. dollar. Use a minus sign or parentheses for a negative net present value.) The net present value (NPV) at the high point for revenue is nearest hundredth percent, X.XX\%.) The internal rate of return (IRR) at the high point for revenue is %. Use a minus sign or parentheses for a negative net present value.) The net present value (NPV) at the low point for revenue is hundredth percent, X.XX\%.) The internal rate of return (IRR) at the low point for revenue is %. The net present value is Requirement 5. Discuss how the changes in assumptions have affected the decision to expand. As can be observed from the answers to requirements 1. through 4 . above, the different assumptions lead to recommendations for the decision to expand