Please work on these problems and submit them.

1. Primus Corp. is planning to convert an existing warehouse into a new plant that will increase its production capacity by 45 percent. The cost of this project will be $7,125,000. It will result in additional cash flows of $1,875,000 for the next eight years. The company uses a discount rate of 12 percent.

• What is the payback period?

• What is the NPV for the project?

• What is the IRR for the project?

2. Skywards Inc., an airline caterer, is purchasing refrigerated trucks at a total cost of $3.25 million. After-tax net income from this investment is expected to be $750,000 for the next five years. Annual depreciation expense was $650,000. The companys cost of capital is 15 percent.

• Compute the discounted payback for this project?

• Compute the NPV for this project

• Compute the IRR for this project

3. You are considering a project that has an initial outlay of $1million. The profitability index of the project is 2.24. What is the NPV of the project?

4. Identify the weaknesses of the payback period method.

5. Management of Franklin Mints, a confectioner, is considering purchasing a new jelly bean-making machine at a cost of $312,500. They project that the cash flows from this investment will be $121,450 for the next seven years. If the appropriate discount rate is 14 percent, what is the NPV for the project?