WW Industries is considering a proposal for a joint venture that will require an investment of $13 million. At the end of the 5th year, WWIs joint venture partner will buy out WWIs interest for $10 million. WWIs CFO has estimated that the appropriate discount rate for this proposal is 12%.

a. Calculate the NPV for this proposal

b. Construct a table and graph the NPV Profile for interest rates between 1% and 25%

c. Make a recommendation to the CFO concerning whether WWI should enter into this joint venture.

The expected cash flows are given below.

Year Cash Flow

0 -13,000,000

1 3,000,000

2 3,000,000

3 3,000,000

4 3,000,000

5 10,000,000