A. Alyeska Salmon Inc., a large salmon canning firm operating out of Valdez, Alaska, has...
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A.
Alyeska Salmon Inc., a large salmon canning firm operating out of Valdez, Alaska, has a new automated production line project it is considering. The project has a cost of $367,000 and is expected to provide after-tax annual cash flows of $86,300 for eight years. The firm's management is uncomfortable with the IRR reinvestment assumption and prefers the modified IRR approach. You have calculated a cost of capital for the firm of 12 percent. What is the project's MIRR? Use the percentage form without the % sign, and round it to one decimal place, e.g., 13.1.
B.
Long Futures, Inc. has been presented with an investment opportunity which will yield end-of-year cash flows of $56,000 per year in Years 1 through 4, $75,000 per year in Years 5 through 9, and $40,000 in Year 10. This investment will cost the firm $320,000 today, and the firm's cost of capital is 12 percent. 1. What is the NPV for this investment? (In Box 1; Round it to a whole dollar and without the dollar sign.) 2. What is the IRR of the investment? (In Box 2; Answer in percentage, but without the % sign, and round it to one decimal place) 3. Compute the payback. (Box 3; Round it to one decimal place)
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