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Siesta Incorporated is looking at a project and has the appropriate cash flow. However, there is much disagreement on the appropriate discount rate to use

Siesta Incorporated is looking at a project and has the appropriate cash flow. However, there is much disagreement on the appropriate discount rate to use with the project.

  1. Barracuda Count Dracula, the CFO, has requested that you provide the NPV at various interest rates between 0% and 40% at 2% intervals. That way when they are able to access the proper discount rate for this project they will know if the project is a go.
  2. In addition, you are to graph your NPV results at each interest rate to show the NPV profile of the project.
  3. Confirm that the IRR intersects the horizontal axis at the $0 NPV for the project.

The cash flow for the project is listed below in millions of dollars:

Year

0

1

2

3

4

5

6

7

8

CF

-35.05

3.44

5.79

9.23

14.68

18.39

21.07

16.42

11.68

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