Use the following information to determine if Moto Co. should do Project A with the following Incremental Cash Flows. 1. What is the Payback period? Based on the Payback period you calculated, should Moto Co. go forward with Project A? 2. Assume a 15% WACC, what is the NPV? (Remember, just add up PV of all Cash Flows) 15 Based on the NPV you calculated should Moto Co. go forward with Project A? Why? 3. Assume a 15% WACC, what is the MIRR? Plug the totals in from above to solve for the MIRR. Based on the MIRR you calculated should Moto Co. go forward with Project A? Why? 4. What is the PI for Project A. Remember, Profitability Index tells us the ratio of the PV of +CFs to the PV of - CFs or in other words the \$'s returned in PV terms for each $ of () outflows. Based on the PI you calculated should Moto Co. go forward with Project A? Why? Which of the following is the best estimate of the IRR to the nearest WHOLE \%, [45%,55%,65%] (Hint: Look at the MIRR and use that as a starting point) Try your first guess What about your second guess? a. Now use your CF feature on your calculator and calculate the actual IRR. Based on the IRR you calculated should Moto Co. go forward with Project A? Why? Based on the IRR you calculated should Moto Co. go forward with Project A? Why? b. If the NPV is positive, the IRR should be [higher / lower] than the MIRR? Why? c. If the NPV is negative, the IRR should be [higher / lower] than the MIRR? Why? d. What are the two problems with IRR 1. IRR assumes all cash flow are re-invested at? 2. If the Cash flow pattern has more than one sign change