Compute the npv and irr of each project

Reference no: EM131544059

Assignment: Corporate Finance

You are part of Marcel Arnaud^'s team to analyze the 7 different projects under consideration.

The table in the case describes the expected cash flows of the different projects. All the costs and benefits of the projects have been taken into consideration except for two potential costs:

1. John Hsu, the manager sponsoring the project to build a factory in the U.S., did not include the loss in output of the French plant in Years 4-10. He claims that those cash flows are not part of his proposed project and as such should not be included.

2. Bertrand Godard, who is proposing to expand capacity in Brittany, has not included the cost of the land because he claims that the firm already owns it.

However, you should note that the cash flows of the project include the sale of the land in year 10.

Before conducting your analysis, think about whether these decisions are correct and, if not, adjust the cash flows accordingly.

Clarifications:

The case gives you the WACC of each project. This is just the discount rate.

As the case indicates, CCR has only 75M in its bank account to pay for the projects

investment costs.

Assignment Questions

1. Compute the NPV and IRR of each project. If there were no budget constraint, which projects would you recommend?

2. Which projects would you recommend with the 75M budget? Assume first that if CCR sells the land, it will NOT use the proceeds to increase its capital.

Reference no: EM131544059

Questions Cloud

Conduct an internet search for a news article : Conduct an Internet search for a news article that describes an example of a group conflict requiring resolution, or a past conflict which was successfully.

Which questions should you ask to discern the difference : How can you differentiate between an appeal to a legitimate authority and an appeal to an illegitimate authority

Firm wants to raise capital by issuing some securities : A firm wants to raise capital by issuing some securities. Therefore issuing convertible bonds is always better than other security issues.

The importance of organizational culture in that process : Discuss the process of evolving a group into a team and the importance of organizational culture in that process.

Compute the npv and irr of each project : Compute the NPV and IRR of each project. If there were no budget constraint, which projects would you recommend?

Describe at least three general child-rearing factors : Describe at least three general child-rearing factors that are thought to contribute to altruism in children

Bond with a maturity in seven years : Mark wants to earn at least 15% by investing her money. A friend suggested for her to buy a bond with a maturity in seven years.

Firm may want to divest itself of some of its assets : A firm may want to divest itself of some of its assets for all of these reasons except to:

What are major technical factors that hinder software reuse : What are the major technical and nontechnical factors that hinder software reuse? Do youpersonally reuse much software and, if not, why not?

User Account

All Pages