1. Mille-Hiver Corp. is considering a 20-year project that requires an initial investment of $15 million. The project provides an annual cash inflow of $1.5 million for the first ten years and an annual cash inflow of $2.5 million for the subsequent ten years. If the firm’s required return is 10%, what is the net present value (NPV) of this project? (2 points)

Question 2 Tempest Industries Inc. is considering a 13-year project that requires an initial investment of $50 million. The project provides no annual cash inflow for the first five years, an annual cash inflow of $20 million for the subsequent five years, and an annual cash inflow of $25 million during the final three years. If the firm’s required return for this project is 15%, what is the profitability index (PI) of this project? (2 points)

Question 3 Moonlight Gas & Electric Inc. is undertaking a 50-year project that requires an initial investment of $100 million. The project provides no annual cash inflow for the first ten years, an annual cash inflow of $23 million from Year 11 through Year 20, and an annual cash inflow of $36 million during the subsequent 30 years. If the firm’s required return for this project is 10.20%, what is the internal rate of return (IRR) of this project? (2 points)

Question 4 Martingale Corporation is considering a project that requires an initial investment of $5,000 in Year 0. The project is also expected to have a “net cost” of $5,000 in Year 1. It will then provide a positive annual cash inflow of $7,500 in both Year 2 and in Year 3. The firm’s required return for this project is 12%. What is the project’s modified internal rate of return (MIRR)? (2 points)

Question 5 Consider the project in Question 3. What is the Equivalent Annual Cost (EAC) of the project? (2 points)

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To answer your questions lets calculate the net present value NPV profitability index PI internal rate of return IRR modified internal rate of return MIRR and equivalent annual cost EAC for each proje... View the full answer