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Part 3: Read the following information

You are still dealing with the same project. And, your supervisor asked you to stick with the free cash flow stream given at the beginning of the analysis: $665,000 annually. You are asked to find at which rate the NPV is equal to zero. In addition, you are asked to analyze the impact of the change in the cost of capital.

Please use the following information to complete the Part3 Q1:

• To analyze the impact, you are using 9 different discount rates: 4%, 5%, 6%, 7%, 8%, 9%, 10%, 11%, and 12%.

• After analyzing, you are required to find IRR.

• In addition, you are asked to confirm if the NPV is equal to zero with the discount rate, which is

  equal to the IRR.

A B D E F G H J K L Do not change the format! 0 7 Initial investment: : 8 Number of years: 9 Annual FCF: 10 10 $2,150,000.00 4 $665,000.00 4.00% 5.00% 11 12 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% - 12.00% NP $4 2 3 4 0 $2,150,000 $3 3 $665,000 $665,000 $665,000 $665,000 $2 13 14 Cost of capital: 15 10 16 17 18 19 20 P3-Q1: 21 Year 22 Initial Initial investment 23 FCF 24 25 PV with 400.00% discount rate 26 NPV with 400.00%% discount rate 27 PV with 500.00%% discount rate 28 NPV with 500.00%% discount rate 29 PV with 600.00%% discount rate 30 NPV with 600.00%% discount rate 31 PV with 700.00%% discount rate 32 NPV with 700.00%% discount rate 33 with 800.00%% discount rate 34 NPV with 800.00%% discount rate 35 PV with 900.00%% discount rate 36 NPV with 900.00%% discount rate 37 PV with 1000.00%% discount rate 38 NPV with 1000.00%% discount rate 36 39 PV with 1100.00%% discount rate 40 NPV with 1100.00%% discount rate 41 PV with 1200.00%% discount rate 42 NPV with 1200.00%% discount rate 43 Initial Investment 44 FCF in year 1 45 FCF in year 2 46 FCF in year 3 $1 $0 4.00% 5.00% 6.00% 7.00 -$2,150,000.00 $665,000.00 $665,000.00 $665,000.00

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