Payback Discounting Cannibalization You are evaluating purchasing the rights to

Payback discounting cannibalization you are

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PaybackDiscountingCannibalizationYou are evaluating purchasing the rights to a project that will generate after tax expected cash flows of $90,000 at the end of each of the next five years, plus an additional $1,000,000 at the end of the fifth year as the final cash flow. You can purchase this project for $950,000. If your firm's cost of capital (aka required rate of return) is 15%, what is the NPV of this project? (Answer to the nearest $1000.) 2. You are evaluating purchasing the rights to a project that will generate after tax expected cash flows of $90,000 at the end of each of the next five years, plus an additional $1,000,000 at the end of the fifth year as the final cash flow. You can purchase this project for $950,000. At this price, what rate of return wouldyou earn on the investment (aka what is the internal rate of return)? 3. If accepting 1 project implies that you can NOT also accept another alternative project, we would say these 2 projects are: 4. You are considering the purchase of an investment that would pay you $5,000 per year for Years 1-5, $3,000 per year for Years 6-8, and $2,000 per year for Years 9 and 10. If you require a 14 percent rate of return, and the cash flows occur at the end of each year, then what is the MOST you would be willing to pay for this investment?* compute pv of cf stream* $21,937.26Using your CF keys are likely the simplest/easiest way to do this (review online DB posting for a review of those)

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