What are the worst case and best case irrs

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The staff of Jefferson Memorial Hospital has estimated the following net cash flows for a satellite food services operation that it may open in its outpatient clinic:

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The Year 0 cash flow is the investment cost of the new food service, while the final amount is the terminal cash flow. (The clinic is expected to move to a new building in five years.) All other flows represent net operating cash flows. Jefferson's corporate cost of capital is 10 percent.

a. What is the project's IRR? Its MIRR?

b. Assuming the project has average risk, what is its NPV?

c. Now, assume that the operating cash flows in Years 1-5 could be as low as $20,000 or as high as $40,000. Furthermore, the salvage value cash flow at the end of Year 5 could be as low as $0 or as high as $30,000. What are the worst case and best case IRRs? The worst case and best case NPVs?

Reference no: EM131183328

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