Question: Please show all intermediate calculations. Thank you. Using the equation NPV = sigma_j=1^N CF_i/(1 + IRR)^i = 0 Your firm is considering a project that
Please show all intermediate calculations. Thank you. Using the equation NPV = sigma_j=1^N CF_i/(1 + IRR)^i = 0 Your firm is considering a project that will cost $2 million upfront, generate cash flows of $4.5 million per year for 2 years, and then suffer a cleanup and shutdown cost of $7.02 million at the end of the second year. How many IRRs does this project have? Assuming the cost of capital (discount rate) is 10%, would you take this project? Your firm is now considering another project that will also cost $2 million upfront, generate cash flows of $3.5 million per year for 2 years, and then bear a shutdown cost of $5.02 million at the end of the second year. How many IRRs does this project have? Would you take this project given the market interest rate of 10%
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