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show steps please

15. 16. Would you pick using the IRR rule? C. How would you explain the differences between the two rules? Which one would you rely on to make your choice? You are analyzing an investment decision, in which you will have to make an initial investment of $10 million and you will be generating annual cash flows to the firm of $2 million every year, growing at 5% a year, forever. a. Estimate the NPV of this project, if the cost of capi- tal is 10%. b. Estimate the IRR of this project. You are analyzing a project with a thirty-year lifetime, with the following characteristics: The project will require an initial investment of $20 million and additional investments of $5 million in year 10 and $5 million in year 20. The project will generate earnings before interest and taxes of $3 million each year. (The tax rate is 40%.) The depreciation will amount to $500,000 each year, and the salvage value of the equipment will be equal to the remaining book value at the end of year 30. The cost of capital is 12.5%. Estimate the NPV of this project. b. Estimate the IRR on this project. What might be some of the problems in estimating the IRR for this project? . a