You are analyzing a proposed expansion investment your company is considering. It is expected to cost $32 million, and the incremental after-tax profits are projected to be $2 million in year 1, $7 million in year 2, $11 million in year 3, $12 million in year 4, and $12 million in year 5. You assume after tax returns are received at year-end. The WACC is conservatively estimated to be 8%.
a. Draw a timeline.
b. Compute the project’s NPV.

Calculate the IRR for the project described. Use a financial calculator.
c. Use the MIRR method assuming 8% for both PV and FV calculations.
d. Based on your answers, should your company pursue the proposed expansion?