Question: sorry to occupy your time, please help me do this question and please step by step so I can understand A capital investment project will

sorry to occupy your time, please help me do this question andsorry to occupy your time, please help me do this question and please step by step so I can understand

A capital investment project will require an initial outlay of $55,000 and is expected to generate an after-tax net cash flow of $7,500 in one year. After-tax net cash flows are then expected to grow at a rate of "g" per year for 5 years, ending 6 years from today In each year after that in perpetuity, after-tax net cash flows are expected to grow at a fixed rate of 1.5% per year. The project's cost of capital is 21%. (a) (4 points) If the terminal value of the project at the end of year 6 (i.e. the present value of all remaining cash flows as of the end of year 6) is $53,486.08, what is the project's NPV? (Hint: first solve for the initial growth rate g) (b) (3 points) Suppose that you have an alternative capital investment project (project B) that requires a $50,000 upfront outlay. This project will generate $2,500 in after- tax net cashflows in one year. In each after that in perpetuity, after-tax net cash flows are expected to grow at a fixed rate of 2.5% per year, what is project B's IRR? Given that the cost of capital for project B is 6.5%, what is the correct decision (accept/reject) according to the IRR rule1? (c) (5 points) Consider another project (project C) which requires an upfront cost of $60,000, and generates a constant S9,000 per year, starting in one year, for 10 years. Assume that project C can be always be replicated at the end of its 10-year life at the same terms, and has the same cost of capital as project B (ie, 6.5%). If you were forced to choose between investing in either project B (from part b) or project C, then determine which of the two projects you should choose to invest in (if any) using the equivalent annual benefit. (Hint: first calculate the NPV of both projects)

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