Part A) Mr. Burns is looking to open a second nuclear power plant in Springfield. It will have the following cash flows:

Year Cash Flow

0 -29,000

1 11,200

2 13,900

3 15,800

4 12,000

5 -9,400

The company uses an 19% discount rate on all of its projects. Using the combination method what is the MIRR of the project?

Part B) Your professor has been presented with two exciting investment opportunities. The first business, Lord Stanley's Silverworks, produces large trophies in the Tampa Bay area. The second, AllSTARS Golf, provides golf lessons to athletes in Dallas. The trophy business requires an initial investment of $75,000 and produces cash flows of $25,000, $35,000, and $41,000 over the next three years, respectively. The golf lessons business will require a smaller investment of $25,000 and produces cash flows of $5,000, $13,000, and $18,000. What is the IRR of the project that should be selected if interest rates are 13.75% (Hint: Draw an NPV profile)?

Part C) Freddy's BBQ, a Washington D.C. area ribs joint which caters to high level politicians, is looking to open a new franchise in Philadelphia. They anticipate that the new restaurant will cost $23.3 M to open today, but will produce cash flows of $8.0 M, $9.6 M, and $8.6 M over the next three years, respectively. What is the profitability index of this investment given a 14.15% required return?

Part D) J. Exotics Inc. (JEI) is interested in opening up a new amusement park, complete with rides and exotic animals. Fearful that he might never financially recover from the initial investment required to open this park, he hires a consultant to analyze the potential initial cash outlay.

Carol's Consulting Services (CCS) has identified the following financial data. JEI bought some land and office space six years ago for $7 million in anticipation of using it for a recording studio, but the company has since decided to rent these facilities from a competitor instead and the property is now vacant. If this property was sold today, the company would net $7.9 million. The company wants to build its new amusement park on this land; the facilities will cost $12.9 million to build, and the site requires $854,000 worth of grading before it is suitable for construction.

What should CCS recommend as the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project? (i.e. What is CFA₀?)

*please show work to all parts of the question. thanks*