You will calculate investment returns using various ROI methods and appraise a specified new investment to determine its profitability. Problem 1: A project has an initial cost of $40,000, expected net cash inflows of $9,000 per year for 7 years, and a cost of capital of 11%. REQUIRED: What is the project's NPV? (Hint: Begin by constructing a timeline.) What is the project's payback period? Problem 2: Your division is considering two investment projects, each of which requires an up-front expenditure of $15 million. You estimate that the investments will produce the following net cash flows: Year Project A Project B 1 $ 5,000,000 $20,000,000 2 3 10,000,000 20,000,000 10,000,000 6,000,000 REQUIRED: What are the two projects' net present values, assuming the cost of capital is 5%? What are the two projects' net present values, assuming the cost of capital is 10%? What are the two projects' net present values, assuming the cost of capital is 15%? Problem 3: Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $22,000, whereas the gas-powered truck will cost $17,500. The cost of capital that applies to both investments is 12%. The life for both types of truck is estimated to be 6 years, during which time the net cash flows for the electric-powered truck will be $6,290 per year, and those for the gas-powered truck will be $5,000 per year. Annual net cash flows include depreciation expenses. REQUIRED: Calculate the NPV for each type of truck and decide which to recommend. PDF version is attached in the Assignment Requirements below. APR LO 5 tv MacBook Pro CDO Q. BACC