this is a multi part case study question please solve it and provide all calculations and formulae and relevant information such as references as asked in the question, thank you!

CASE STUDY: The acquisition of Medilab plc by Athena plc Plaza plc is a large conglomerate with operations in restaurants and hotels. The company has an ambitious strategic plan of fast expansion in coffee shops in city centres and shopping malls, and has hired you to advise the Board of Directors on future investment opportunities. You work closely with the marketing and finance Directors and you have collected the following information regarding six new investments. These investments opportunities are established, independent cafs of various sizes and with different potential. The Financial Director has conducted an initial investigation and has confirmed the owners of the businesses are prepared to sell to Plaza plc at agreed prices. On this basis, the Finance Director has given you the amounts of the initial investment required for each individual investment project, which includes the agreed price and other necessary expenses:

The initial investments will be paid immediately and the investments will all have a four-year life. At the end, they will be terminated with no further cash flows. All the forecasted annual net cash flows will be at the end of the year. Plaza plc will use a mix of 50% equity and 50% debt to finance these investments. The cost of equity will be 12% and the cost of debt will be 8%. Required: a) Estimate the net present value of these investments and recommend to the Board of Plaza plc which of these investments to undertake and which not, given that there is no shortage of investment funds and your predictions will be realised. b) Estimate the internal rate of return for these investments and make recommendation to the Board based on IRR findings. c) Discuss potential inconsistencies of your findings using NPV and IRR and explain which is better to use as an investment appraisal method.

The Finance Director informs you that some members of Plaza plc Board, which will receive your report and consider these investments, have no finance background and will struggle to understand your arguments about the IRR and its merits and shortcomings. She therefore advises you to prepare an illustration about the IRR using a simple example. She gives you a simple example of the net cash flows of four (4) projects. The cash flows assumed to occur now (at time T0), at the end of the first year (T1) and the end of second year (T2) and suggests to draw the graphs of the NPVs for a number of interest rates.

Required: d) Provide the graph of the NPV of the net cash flows of these four projects (A, B, C and D), as given in the above table, for various rates that will be used as discount factors. Use this graph to illustrate your discussion of the issues related to the use of IRR as investment appraisal rule. The Board of Plaza plc has also asked you to include in your report two alternative scenarios: Alternative scenario 1: Explore the possibility that Plaza plc will be able to raise new, less costly, finance for these six investments. It is expected to raise debt at 5% cost and equity at 9% cost and use them again at equal proportions for financing these new investments. The investments will all have the same, as above, four-year life. At the end, they will be terminated with no further cash flows. All the forecasted annual net cash flows will be at the end of the year. Required: e) Estimate the net present value (NPV) and the internal rate of return (IRR) of these investments with the new cost of capital and compare the findings for the two methods as well as your previous findings. Alternative scenario 2: The second alternative, which you have to explore, is the case of Plaza plc not to pursue these six investment projects but instead to set up and operate its own cafes by leasing alternative premises. In this case, the initial investment cost will be the same but the subsequent net cash flows will be again at the end of each year but they will change as follows:

Investment 1 will require 2,400,000 initial investment. The net cash flow in the first year will be 5% of the initial investment and it will grow forever at 2%. Investment 2 will require 2,250,000 initial investment. The net cash flow in the first year will be 6% of the initial investment and it will grow forever at 1.5%. Investment 3 will require 3,000,000 initial investment. The net cash flow in the first year will be 6% of the initial investment and it will grow forever at 1.8%. Investment 4 will require 2,630,000 initial investment. The net cash flow in the first year will be 4.5% of the initial investment and it will grow forever at 2%. Investment 5 will require 3,750,000 initial investment. The net cash flow in the first year will be 5% of the initial investment and it will grow forever at 3%. Investment 6 will require 5,000,000 initial investment. The net cash flow in the first year will be 6% of the initial investment and it will grow forever at 2%. Under this alternative scenario 2, the six new investments will be financed from the newly raised capital, with 50% debt, which costs 5% and 50% equity, which costs 9%. Required: f) Estimate the net present value (NPV) of these six investment under this scenario 2. Your challenge is to make your point clear and develop short, convincing and factual arguments. Your report should not be longer than 2,000 words. The cover page, formulas, tables, reference list and any appendices do not count towards the overall word count. You should make your report clear and comprehensive as well as complete to read without constructive references to appendices in a way that make them an extension of the report. For that, you are allowed to copy-paste in the main body of your report, properly edited parts of the data from the appendices, which will not be included in the word count. The report should include the following sections: Title Page Introduction Analysis and presentation of your findings. Your presentation should be clear and include any formulas and calculations in the main body of your report

Critical discussion and recommendations to the management of the company and other parties Overall reflection and conclusion References Appendices (include data, information and calculations) ASSESSMENT CRITERIA: This assignment is worth 30% of the final module mark. Criterion

1: You will be assessed on the structure of your report and clarity of presentation and discussion. (10 marks) Criterion

2: Estimate the net present value of these investments and recommend to the Board of Plaza plc which of these investments to undertake and which not, given that there is no shortage of investment funds and your predictions will be realised. (20 marks) Criterion

3: Estimate the internal rate of return for these investments and make recommendation to the Board based on IRR findings. (20 marks) Criterion

4: Discuss potential inconsistencies of your findings using NPV and IRR and explain which is better to use as an investment appraisal method. (20 marks) Criterion

5: Provide the graph of the NPV of the net cash flows of these four projects (A, B, C and D), as given in the above table, for various rates that will be used as discount factors. Use this graph to illustrate your discussion of the issues related to the use of IRR as investment appraisal rule. (10 marks) Criterion

6: Estimate the net present value (NPV) and the internal rate of return (IRR) of these investments with the new cost of capital, as in the Alternative scenario 2 and compare the findings for the two methods as well as your previous initial findings. (10 marks) Criterion

7: Estimate the net present value (NPV) of these six investment projects under Alternative scenario 2. (10 marks)

Initial Investment Investment 1 Investment 2 Investment 3 Investment 4 Investment 5 Investment 6 2,400,000 2,250,000 3,000,000 2,630,000 3,750,000 5,000,000 Working with the Directors of the marketing, finance and operations departments of Plaza plc, you have collected information about the net operating cash flows of these investment projects as follows: 750,000 50,0001,800,000 Investment 1 Investment 2 Investment 3 Investment 4 Investment 5 Investment 6 2,400,000 2,250,000 3,000,0001,500,0003,750,000 1,500,000 3,750,000 2,630,000 3,750,000 1,050,0001,350,000 1,950,000 1,950,000 5,000,0001,050,000 1,800,000 1,600,0002,400,000 300,000 3,200,0003,450,000 450,000 900,000 750,000 1,650,000 240,0001,500,000 To Ts Tz 800 -22,100 50,000-28,000 50 500800 D4,300 10,000 -6,000 -400-200 . 1st year net cash flow as % of initial investment 0.05 006 006 0.045 0.05 006 Initial Investment Investment 1 Investment 2 Investment 3 Investment 4 Investment S Investment 6 2,400,000 2,250,000 3,000,000 2,630,000 3,750,000 5,000,000 growth 0.02 0.015 0018 0.02 0.03 0.02