Estimated Year Cash Flows A company is planning to make an investment in the expansion of...

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Estimated Year Cash Flows A company is planning to make an investment in the expansion of a manufacturing plant. The amount of the investment is $12 million and the investment is expected to result in incremental cash flow of $2 million in the year after the expansion is completed. Cash flows over the following 4 years are forecast to grow by $1 million per year. The company's required rate of return for the project is 10%. 1. What is the NPV and IRR of this investment? 2. Should the board of directors approve the imnvestment? 3. If the plant expansion turns out to cost $14 million instead of $12 million, does the investment still have positive NPV? Discount Rate 2 Net Present Value $0 3. Internal Rate of Return #NUM! Your answers here: New Store Project 2022 2023 2024 2025 2026 2027 A company's BO0 is considering an investment of SR00,000 to open a new store outlet. The incremental cash flow from the new store is estimated at $200.000 in the first year after it opens. Over the following 4 years the cash flow from the new store is estimated to grow at 9% per year. Initial Outlay Incremental Cash low $0 50 WACC 10.0% Rk Free Rate NPV IRR 50 1. What is the estimated IRR on this investment? Should the B00 approve the Investment? 2. If the cash flow in the first year is only $170,000 but it grows at 12 per year over the following four years, what is the IRR? Should the BOD approve the Investment? NUMI 24% MIRR NDIVDI Your answers here: Estimated Year Cash Flows A company is planning to make an investment in the expansion of a manufacturing plant. The amount of the investment is $12 million and the investment is expected to result in incremental cash flow of $2 million in the year after the expansion is completed. Cash flows over the following 4 years are forecast to grow by $1 million per year. The company's required rate of return for the project is 10%. 1. What is the NPV and IRR of this investment? 2. Should the board of directors approve the imnvestment? 3. If the plant expansion turns out to cost $14 million instead of $12 million, does the investment still have positive NPV? Discount Rate 2 Net Present Value $0 3. Internal Rate of Return #NUM! Your answers here: New Store Project 2022 2023 2024 2025 2026 2027 A company's BO0 is considering an investment of SR00,000 to open a new store outlet. The incremental cash flow from the new store is estimated at $200.000 in the first year after it opens. Over the following 4 years the cash flow from the new store is estimated to grow at 9% per year. Initial Outlay Incremental Cash low $0 50 WACC 10.0% Rk Free Rate NPV IRR 50 1. What is the estimated IRR on this investment? Should the B00 approve the Investment? 2. If the cash flow in the first year is only $170,000 but it grows at 12 per year over the following four years, what is the IRR? Should the BOD approve the Investment? NUMI 24% MIRR NDIVDI Your answers here:

Answer rating: 100% (QA)

Solution Part 1 The calculation for NPV and IRR is shown below Formula Snip Notes ... View the full answer