What are the irrs of the opportunity

Reference no: EM131975348

Question: Your firm has been hired to develop new software for the university's class registration system. Under the contract, you will receive $499,000 as an upfront payment. You expect the development costs to be $436,000 per year for the next 33 years. Once the new system is in? place, you will receive a final payment of $849,000 from the university 44 years from now.

What are the IRRs of this opportunity?(Hint: Build an Excel model which tests the NPV at 1% intervals from 1% to 40%. Then zero in on the rates at which the NPV changes signs.)

If your cost of capital is 10%, is the opportunity attractive. Suppose you are able to renegotiate the terms of the contract so that your final payment in year 44 will be $1.2 million

What is the IRR of the opportunity now?

Is it attractive at the new terms?

Reference no: EM131975348

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