URGENT PLZ.... Please help me solve questions 1, 2, and 3. make sure you solve the whole parts of it. Thanks
years. The company will have to provide product support Innovation Company is thinking about making a new sowe product Upfront costs to make and develop the produce 4.03 milion. The product is expected to generate proof $1.6 million per year for expected to cost $97.000 per year in perpetuty Assume a profits and expenses occur at the end of the year. What is the NPV of this investment of the cost of capitalis 5.7% Should the firm undertake the projectRepeat the analysis for discount rates of 12% and 16.9%, respectively What does the IRR e indicate about this investment? a. What is the NPV of this investment the cost of capitalis 5.7% Should the firm undertake the projectRepeat the analysis for discount rates of 12% and 16.9%, respectively If the cost of capital is 5.7%, the NPV will be s Round to the nearest do.) Should the firm undertake the project? (Select the best choice below) A. No because the NPV is not greater than the initial costs OB. No bonus the NPV is less than c. Yes, because the Visualto greater than OD. There is not enough information to answer this question When 1.2%, the NPV will be s o und to the rest dolar) When 169%, the NPV will be found to the nearest dollar) b. What is the IRR of this investment opportuni? (Select the choices that apply) A. There is at least one IRR between 5.7% and 16.9% B. There is at least one IRR between 12% and 5-7% c. From the answer to a there are at last two RRs. D. There is only one IRR between 1.2 and 16.9% c. What does the IRR indicate about the investment? Select the best choice below) O A. Since w as one of the Resis higher than the discount at the IRR say to take the proc OB. Since at least one of the IRR is lower than the discount at the IRR e says to not take the project. OC The IRR we says nothing in this case because there are two IRRS OD. In this case, the IRR you can either or not take the project You are choosing between two projects. The cash flows for the projects are given in the following table ($ millions Project -551 a. What are the IRRs of the two projects? b. If your discount rate is 5.2%, what are the NPVs of the two projects? c. Why do IRR and NPV rank the two projects differently? a. What are the IRRs of the two projects? The IRR for project Ais (Round to one decimal place.) The IRR for project Round to one decimal place.) b. If your discount rate is 5.2%, what are the NPVs of the two projects? If your discount rate is 52%, the NPV for project is s milion (Round to two decimal places) If your discount rate is 5.2%, the NPV for project Bis m ilion (Round to two decimal places.) c. Why do IRR and NPV rank the two projects differently? (Select from the drop-down menus.) NPV and IRR rank the two projects differently because they are measuring different things is measuring value creation, while two measures may give different rankings when the initial investments are different. is measuring return on investment. Because retums do not scale with different levels of investment, the Open Sons, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $505 milion, and wil operate for 20 years. Open Seas expects annual cash fows from operating the ship to be $71.7 million and its cost of capitalis 12.2% a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph c. Should Open Seas proceed with the purchase? d. How far off could OpenSeas' cost of capital estimate be before your purchase decision would change? Discount rate() b. Identify the IRR on the graph. The approximate IRR from the graph is %. (Round your answer to one decimal place) c. Should Open Seas go ahead with the purchase? (Select the best choice below.) O A. Yes, because at a discount rate of 12.2%, the NPV is negative OB. Yes, because at a discount rate of 12.2%. the NPV is positive OC. No, because at a discount rate of 12.2%, the NPV is positive OD. No, because at a discount rate of 12.2%, the NPV is negative. d. How far off could Open Seas cost of capital estimate be before your purchase decision would change? (Note: Subtract the discount rate from the approximate IRR.) The cost of capital estimate can be off by %. (Round to one decimal place.)
