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Management of Frisco Films is considering the following capital projects: Project Cost...

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Accounting

Management of Frisco Films is considering the following capital projects:

Project Cost Annual After-Tax Cash Flows Number of Years
New film studios $28,000,000 $4,340,000 15
Cameras and equipment 4,480,000 1,120,000 8
Land improvement 7,000,000 1,652,000 10
Motion picture #1 24,920,000 6,958,000 5
Motion picture #2 15,960,000 5,488,000 4
Motion picture #3 11,200,000 3,220,000 7
Corporate aircraft 3,360,000 1,078,000 5

Assume that all projects have no salvage value and that the firm uses a discount rate of 10 percent. Management has decided that only $35,000,000 can be spent in the current year for capital projects.

A. Use Excel to determine the net present value, profitability index, and internal rate of return for each of the seven project. Note: Round NPV (final answer) to the nearest whole dollar. Note: Round PI to two decimal places (i.e. round 1.466 to 1.47). Note: Round IRR percentage to one decimal place (i.e. round 8.555% to 8.6%).

B.

Rank the seven projects according to each method used in (a).

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