Business, 04.04.2020 10:49 amoakoh800003

The Pinkerton Publishing Company is considering two mutually exclusive expansion plans. Plan A calls for the expenditure of $56 million on a large-scale, integrated plant that will provide an expected cash flow stream of $9 million per year for 20 years. Plan B calls for the expenditure of $12 million to build a somewhat less efficient, more labor-intensive plant that has an expected cash flow stream of $3.8 million per year for 20 years. The firm's cost of capital is 11%.

Calculate each project's NPV. Round your answers to the nearest dollar.

Calculate each project's IRR. Round your answers to two decimal places.

Set up a Project
Δ
by showing the cash flows that will exist if the firm goes with the large plant rather than the smaller plant.

Year 0

Years 1-20

What is the NPV for this Project
Δ
? Round your answer to the nearest dollar.

What is the IRR for this Project
Δ
? Round your answer to two decimal places.

Answers: 3

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The Pinkerton Publishing Company is considering two mutually exclusive expansion plans. Plan A calls...

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