The Las Vegas Aces ownership are considering two new facility proposals. This is a 20 year...

 

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The Las Vegas Aces ownership are considering two new facility proposals. This is a 20 year project where the cost of capital is 11% and the acceptable payback period is 7 years. Project One: Initial cost is $600m. Revenue will be $150m in year 1, $125m in years 2-6, $110m in years 7-12, and $100m in years 13-20. Project Two: Initial cost is $500m. Revenue will be $125m in years 1-5, $110m in years 6-9, and $100m in years 10-20. What is the payback period for Project One? What is the payback period for Project Two? What is the NPV for Project One? Please use the Excel formula. What is the NPV for Project Two? Please use the Excel formula. Should one use IRR or MIRR to evaluate the rate of return on the projects? Using the correct answer to the above question, what is the rate of retum for Project One? Using the correct answer to the above question, what is the rate of return for Project Two? What project do you accept? Briefly explain why did you accept the answer to the above question? The Las Vegas Aces ownership are considering two new facility proposals. This is a 20 year project where the cost of capital is 11% and the acceptable payback period is 7 years. Project One: Initial cost is $600m. Revenue will be $150m in year 1, $125m in years 2-6, $110m in years 7-12, and $100m in years 13-20. Project Two: Initial cost is $500m. Revenue will be $125m in years 1-5, $110m in years 6-9, and $100m in years 10-20. What is the payback period for Project One? What is the payback period for Project Two? What is the NPV for Project One? Please use the Excel formula. What is the NPV for Project Two? Please use the Excel formula. Should one use IRR or MIRR to evaluate the rate of return on the projects? Using the correct answer to the above question, what is the rate of retum for Project One? Using the correct answer to the above question, what is the rate of return for Project Two? What project do you accept? Briefly explain why did you accept the answer to the above question?

Answer rating: 100% (QA)

To calculate the payback period for each project we need to determine the number of years it takes for the cumulative cash flows to equal or exceed the initial cost of the project For Project One Init... View the full answer