You are (again) asked to evaluate a new tractor project for Deere. The engineers and marketing and accounting folks have pooled their efforts to generate the following expectations about the project's cash flows (FCFF). The WACC = 10%. 1 1-0 CF= -200 2 3 5 6 7 8 30 40 50 40 50 50 30 30 What is the IRR of the project? What is the profitability index (PI) of the project? 9 10 20 10 What is the project's MIRR? a) Do it "brute force" by compounding each cash inflow individually (to the end of the time line) and then summing these to construct TV. b) Devise a shortcut to calculate the TV, and then continue with the usual steps to calculate MIRR. Deere has an alternative investment opportunity besides manufacturing a new tractor. The alternative is to build a production facility in Chengdu China. Project FCFFs are expected to be as follows. t-0 CF= -500 1 -130 2 3 40 80 105 5 110 6 115 7 120 00 8 130 9 130 What is the cross-over rate (i.e. discount) that makes Deere indifferent between the two projects (assuming they are of the same risk)? 10 135