You are a senior manager at nittany aircraft and have been, Ask an Expert

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You are a senior manager at Nittany Aircraft and have been authorized to spend up to $550,000 for projects. The three projects you are considering have the following characteristics:

Project A: Initial investment of $385,000. Cash flow of $165,000 at year 1 and $270,000 at year 2. This is a plant expansion project, where the required rate of return is 12 %.

Project B: Initial investment of $215,000. Cash flow of $170,000 at year 1 and $190,000 at year 2. This is a new product development project, where the required rate of return is 17 %.

Project C: Initial investment of $145,000. Cash flow of $135,000 at year 1 and $65,000 at year 2. This is a market expansion project, where the required rate of return is 17 %.

Assume the corporate discount rate is 15 %.

What is the IRR of project C? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations)

What is the NPV of project C? (Round answer to 2 decimal places. Do not round intermediate calculations)

What is the PI of project C? (Round answer to 2 decimal places. Do not round intermediate calculations)

What is the incremental IRR (aka, crossover point) between Project B & Project C? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92810389

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