Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $4.98 million per year. Your upfront setup costs to beready to produce the part would be $8.01 million. Your discount rate for this contract is 7.7%.a. What is the IRR?b. The NPV is $4.89 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule?a. What is the IRR?The IRR is%. (Round to two decimal places.)b. The NPV is $4.89 million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule? (Select from the drop-down menu.)The IRR ruleC---with the NPV rule.

Both parts of the question are solved.Explanation and Working files are attached below:Comment below…

Answered: Your factory has been offered a…

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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Your storage firm has been offered $96,900 in one year to store some goods for one year. Assume your costs are $95,200, payable immediately, and the cost of capital is 8.1%. Should you take the contract? The NPV will be $ Should you take the contract? The contract (Round to the nearest cent.) be taken (Select from the drop-down menu.)
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $5.00 million per year. Your upfront setup costs to be ready to produce the part would be $8.00 million. Your discount rate for this contract is 8.0%. a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in the value of your firm? Question content area bottom Part 1 a. What does the NPV rule say you should do? The NPV of the project is $ enter your response here XX million. (Round to two decimal places.)
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