Question

# a. Tindall Industries has the opportunity to develop a new plant based hotdog, it estimates that...

a. Tindall Industries has the opportunity to develop a new plant based hotdog, it estimates that the project’s cost of capital is 10%. The project’s expected cash flows (in \$ millions) at the end of year are given below. What is the NPV of this project? Enter your answer in \$ millions without the “\$”; round your final answer to two decimals.

Timeline 0 1 2 3 4 5 6 7
CF -3,000 200 250 300 450 700 1,000 1,000

b.

Given the following end of year cash flows (CF), what is the net-present value (NPV) of this investment opportunity. Assume that the project’s cost of capital is 10%. Round your final answer to two decimals.

Timeline 0 1 2 3 4
CF -1000 300 400 500 700

c.

Given the following end of year cash flows (CF), what is the Internal Rate of Return (IRR) of this investment opportunity. Enter your answer as a percent; do not include the % sign. Round your final answer to two decimals.

Timeline 0 1 2 3 4
CF -1000 300 400 500 700

a. Use NPV function in EXCEL to find the NPV

=NPV(rate,Year1 to Year7cashflows)-Year0 cashflow

=NPV(10%,Year1 to Year7cashflows)-3000=-\$566.54

 cost of capital 10% Year0 -3000 Year1 200 Year2 250 Year3 300 Year4 450 Year5 700 Year6 1000 Year7 1000 NPV -566.54

b&c. Use same formula to find the NPV

=NPV(10%,Year1 to Year4cashflows)-1000=\$457.07

Use IRR function in EXCEL to find IRR

=IRR(Year0 to Year4 cashflows)=26.87%

 cost of capital 10% Year0 -1000 Year1 300 Year2 400 Year3 500 Year4 700 NPV 457.07 IRR 26.87%

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