Question

please include parts a - d , thanks

(NPV, PI, and IRR calculations) Fijisawa Inc. is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. The initial outlay would be $2,000,000, and the project would generate incremental free cash flows of $550,000 per year for 6 years. The appropriate required rate of return is 9 percent. a. Calculate the NPV b. Calculate the Pl c. Calculate the IRR. d. Should this project be accepted? a. What is the project's NPV? (Round to the nearest dollar.) b. What is the project's PI? (Round to three decimal places.) c. What is the project's IRR? % (Round to two decimal places.) d. Should this project be accepted? (Select the best choice below.) A. Yes. The project should be accepted because the project's NPV is positive, PI is greater than one, and IRR is greater than the required rate of return O B. No. The project should be rejected because the project's NPV is negative, Pl is less than one, and IRR is less than the required rate of return.

Answer 1

bol NPV reaent Value of cash Snflou Pseaent Value of Csh CEC4) PV eas (ao00.0a0) 2467256 1 Q.000,000 550000 4.48592 Net Psesent Value 467.256 1-6 cash evofahutaus 9467256.233 2000000 1.2.34 (c) ke osS000 2000,000 (20, pea) 550,000 3.634736 2036.60483.589185 1971051-25 %160 4-80 Va + NP Va ΝΡΥ%-NPV, 1 1 2002000 1-6 2594.9 IRR- KP Cex-1R)

+36,604-80 x1 167 JRR 26604 0125,948-25 167.t 0.506247 16517 16.506 or shuld be accbhel yes bicause NPvis posihve, P1 is hangect The thasn the seguurcd Aale of belusrau jacaters