Ch 11- Assignment - The Basics of Capital Budgeting servers crashed. The company's CFO remembers that the internal rate of return (IRR) of Project Delta is 11.3%, but he can't recall how much Blue Hamster originally invested in the project nor the project's net present value (NPV). However, he found a note that detailed the annual net cash flows expected to be generated by Project Delts. They are: Year Year 1 Year 2 Year 3 Year 4 Cash Flow $1,800,000 $3,375,000 $3,375,000 $3,375,000 The CFO has asked you to compute Project Delta's initial investment using the information currently available to you. He has offered the following suggestions and observations: A project's IRR represents the retum the project would generate abg its NPV is zero or the discounted value of its cash flows equals the discounted value of its cash outflows-when $9,296,809 are discounted using the project's IRUR. The level of nak exhibited by Project Delta is the same Delta's net cash flows can be discounted using blue d by the company's average project, which means that Project $10,404,037 $8,908,943 $9,073,515 Given the data and hints, Project Delta's initial investment is A project's IRR will Year Cash Flow Year 1 $1,800,000 Year 2 $3,375,000 Year 3 $3,375,000 Year 4 $3,375,000 and NPV if the project's cash inflows increase, and everything else is unaffected. CENGAGE MINDTAP Ch 11- Assignment - The Basics of Capital Budgeting the annual net cash flows expected to be generated by Project Delts. They are: The CFO has asked you to compute Project Delta's initial investment using the information currently available to you. He has offered the following suggestions and observations: Given the data and hints, Project Delta's initial investment is A project's IRR will A project's IRR represents the return the project would generate when its NPV is zero or the discounted value of its cash inflows equals the discounted value of its cash outflows-when the cash flows are discounted using $550,173 IRR The level of risk exhibited by Project Delts is the same as that exhibited by the company's Delta's net cash flows can be discounted using Blue Hamster's 9% WACC $500,157, which means that Project (rounded to the nearest whole dollar). $575,181 $600,168 (rounded to the nearest whole dollar). if the project's cash inflows increase, and everything else is unaffected. Grade It Now Save & Continue

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