Question: There is no graph or anything additional, this is the question, just like I posted it, Thanks in advance for the help :) Your firm
There is no graph or anything additional, this is the question, just like I posted it, Thanks in advance for the help :)
Your firm has been hired to develop new software for theuniversity's class registration system. Under thecontract, you will receive $502,000 as an upfront payment. You expect the development costs to be $442,000 per year for the next 3 years. Once the new system is inplace, you will receive a final payment of $864,000 from the university 4 years from now.
A. What are the IRRs of thisopportunity?(Hint: Build an Excel model which tests the NPV at1% intervals from1% to40%. Then zero in on the rates at which the NPV changessigns.)
The IRRs of the project in ascending order are _______% and _______%. (Round to two decimalplaces.)
B. If your cost of capital is 10%, is the opportunityattractive or not attractive?
Suppose you are able to renegotiate the terms of the contract so that your final payment in year 4 will be $1.2 million.
C. What is the IRR of the opportunitynow? (Select the best choice below)
- Now there are 3 IRR's
- The IRR Rule always gives the wrong answer
- Now there are no IRRs
- The IRR rule works as before
D. is it attractive at the newterms?
If your cost of capital is 10%, the opportunity is _______________ Select- attractive or not attractive
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