$11.00

(answered) – 1) Consider two streams of cash flows, A and B . Stream A ‘sDescriptionSolution downloadThe Question1)Consider two streams of cash flows, A and B . Stream A ?s first cash flow is $10,600 and is received three years from today. Future cash flows in Stream A grow by 3 percent in perpetuity. Stream B ?s first cash flow is ?$10,000, is received two years from today, and will continue in perpetuity. Assume that the appropriate discount rate is 11 percent.??a.What is the present value of each stream?? ??Present value??Stream A $ ???Stream B $ ???b.Suppose that the two streams are combined into one project, called C. What is the IRR of Project C?????IRR % ?????c.What is the correct IRR rule for Project C?? ??A.?Accept the project if the discount rate is below the IRR.B.?Accept the project if the discount rate is above the IRR.C.?Accept the project if the discount rate is equal the IRR.2)Cutler Petroleum, Inc., is trying to evaluate a generation project with the following cash flows:Year Cash Flow0 ?$ 39,500,000 ?1 ? 63,500,000 ?2 ? 12,500,000 ?a-1What is the NPV for the project if the company requires a return of 11 percent????NPV $ ?a-2 Should the firm accept this project?? ??NoYes3)You are evaluating a project that costs $68,000 today. The project has an inflow of $146,000 in one year and an outflow of $58,000 in two years.What are the IRRs for the project?? IRR??Smallest % ???Largest % ?What discount rate results in the maximum NPV for this project???IRR % ?1 Cash flow of projectGrowthRate106003%11%Present value of 107539.97240484Cash flow of projectGrowthRate-1000011%Present value of -81900.08190008bIRR22.40%0.0004246439cThe…

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