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Toyota Motor Corporation is considering a capital investment project that requires an initial outlay of 100 million. The project is expected to produce the following

Toyota Motor Corporation is considering a capital investment project that requires an initial outlay of ¥100 million. The project is expected to produce the following annual cash flows:

Year12345678
Cash Flows (¥ million)1520253035404550

The discount rate for the project is 10%. The residual value of the investment at the end of 8 years is estimated to be ¥10 million. The corporate tax rate applicable is 28%.

Required:

  1. Calculate the net present value (NPV) of the project.
  2. Compute the internal rate of return (IRR).
  3. Determine the discounted payback period.
  4. Assess the impact of the residual value on the project's NPV.
  5. Evaluate the sensitivity of the project's NPV to changes in the discount rate.

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