3. Boca Raton Stake House is now considering expanding the business. Bob Correll, theowner and CEO, of the company is facing a difficulty which projects he shouldinvest. The projects are:Project CFOFrozenYogurtCF1CF2CF3CF4CF5WACC($1,000) $180 $200 $220 $230 $2508.50%Jewelry ($5,500) $1,200 $1,400 $1,600 $1,800 $2,000 12.50%Soft($3,000) $1,000 $900 $700Drink$600 $500Farming ($7,800) $4,000 $3,200 $2,400 $1,600 $80010%15%Note: All the number is in thousand (,000)Before deciding, he wanted to know the return in both dollar value and percentage.a. Calculate NPV for these projects.b. Calculate IRR for these projects.c. Why WACC for each project is different? Explain.d. If these projects are independent projects, which project should he invest?e. If these projects are mutually exclusive projects, which project should he invest?

Net Present Value or NPV is difference between the present value of cash inflows and the present…

Answered: 3. Boca Raton Stake House is now…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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