Question

Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for both projects is 13 percent.

Project A: Nagano NP-30

Professional clubs that will take an initial investment of $900,000 at Time 0.

Introduction of new product at Year 6 will terminate further cash flows from this project.

Project B: Nagano NX-20

High-end amateur clubs that will take an initial investment of $646,000 at Time 0.

Introduction of new product at Year 6 will terminate further cash flows from this project.

Year NP-30 NX-20

0 -$900,000 -$646,000

1 335,000 255,000

2 325,000 260,000

3 300,000   245,000

4 290,000 225,000

5 200,000 176,000

Complete the following table. Do not round intermediate calculations. Enter the IRR as a percent. Round your profitability index (PI) answers to 3 decimal places.

NP-30 NX-20

NPV = $ ? $ ?

IRR = ?% ?%

PI = ? ?

What is the incremental IRR of investing in the larger project? Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.

Incremental IRR = ?%

?=Answer needed

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

A e W ? v 1x 02-48 ENG 28-02-2020 21 FS370 FPFQ FR FS FT FU F V - 369 370 371 372 YEAR 373 374 375 u WNPO NP 30 -900000 335000 325000 300000 290000 200000 NX 20 -646000 255000 260000 245000 225000 176000 376 377 378 379 380 RATE NPV 381 13% 145312.32 (=NPV(FR380,FR374:FR378) +FR373] 13% 186601.61 [=NPV(FS380,FS374:FS378) +F5373] 382 383 IRR 19.93% (=IRR(FR373:FR378)] 24.97% [EIRR(FS373:FS378)] 384 385 386 387 388 389 390 391 PI = PI = 1+ NPV/INVESTMENT 1.161 [1 + (145312-32/900000)] 1.289 (1 + (186601.61/646000)] 392 B INCREMENTAL CFAT RELEVANT NPV BETA LEVERED IRRnpvbeta RATIO PI PBP ARR invest, EAA MI-np-ir REPLACEMENTS HPR GMAM EAC MACRS REPLACEMENT BOND ... :

W ? v 1x 02:49 ENG 28-02-2020 21 FS414 - FP FQ FR FS FT FU F V - 391 А 392 393 YEAR 394 395 396 NP 30 -900000 335000 325000 300000 290000 200000 UwNAO B NX 20 -646000 255000 260000 245000 225000 176000 INCREMENTAL CFAT NP 30 -NX 20 -254000 80000 65000 55000 65000 24000 397 398 399 400 401 402 403 404 INCREMENTAL IRR = 5.15% (=IRR(FT394:FT399)] 406 407 408 409 410 411 412 413 414 IRRnpvbeta RATIO PI PBP ARR invest, EAA MI-np-ir REPLACEMENTS HPR GMAM EAC MACRS RELEVANT NPV BETA LEVERED REPLACEMENT BONC ...