Question: As a separate project ( Project P ) , the firm is considering sponsoring a pavilion at the upcoming World s Fair. The pavilion s
As a separate project Project P the firm is considering sponsoring a pavilion at the upcoming Worlds Fair. The pavilions initial outlay at T Is $ and it is expected to result in $ million of incremental cash inflows during its year of operation. However, it would then take another year and a $ million cash outflow to demolish the site and return it to its original condition. Thus, Project Ps expected cash flows in millions of dollars look like this:The project is estimated to be of average risk, so its WACC is
What is Project Ps NPV What is its IRR? Its MIRR? Draw Project Ps NPV profile. Does Project P have normal or nonnormal cash flows? Should this project be accepted? Explain.
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