Problem 1a. Calculate the net present value of the foll

Problem 1a. Calculate the net present value of the following project for discount rates of 0 50 and 100%C0 C1 C2-6750 4500 18000b. What is the IRR of the project?Problem 2You have the chance to participate in a project that produces the following cash flows:Project C0 C1 C2 C3 C4 C5A -1000 1000 0 0 0 0B -2000 1000 1000 4000 1000 1000C -3000 1000 1000 0 1000 1000a. If the cost of capital is 10% which projects have a positive NPV? (compute the NPV for each project)b. Calculate the payback period of each period. Which projects would a firm accept using the payback rule if the cutoff period is 3 years?c. Calculate the IRR for each project. d. Which project should you pick? Why?Problem 3A fashion clothing company is considering investing in new machinery to improve its productivity over the next 5 years. You have been given the following information:Sales are predicted to increase by $1500000 in year 1 and continue at this level. Wages will be reduced by $100000 due to increased automation. The new machinery costs $10 million payableimmediately and will have a scrap value of $2million at the end of the five years. All the old machinery can be sold immediately for $2 million.The cost of capital on investment appraisal for this level of risk is 7.5%.Calculate the NPV for this project.
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