Based upon the following cash flows, should Chipper Nipper Cookie Company introduce a new product, Rolling In Dough Pies? The initial investment is $180,000, and the cost of capital is 11.5%.YearsCash Flows1$ 80,0002$ 95,0003$ 95,0004$110,0005$110,0006$110,000 a.Yes, the rounded NPV is $75,428.63 and the IRR is 12.27%. b.No, the rounded NPV is –$221,275.39 and the IRR is 9.97%. c.No, the rounded NPV is –$57,277.32 and the IRR is 8.75%. d.Yes, the rounded NPV is $228, 940.00 and the IRR is 46.62%.

The NPV and IRR can be computed using excel as follows:

Answered: Based upon the following cash flows,…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 13E: Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a...

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Based upon the following cash flows, should Chipper Nipper Cookie Company introduce a new product, Rolling In Dough Pies? The initial investment is $180,000, and the cost of capital is 11.5%.

Years	Cash Flows
1	$ 80,000
2	$ 95,000
3	$ 95,000
4	$110,000
5	$110,000
6	$110,000

	a.	Yes, the rounded NPV is $75,428.63 and the IRR is 12.27%.
	b.	No, the rounded NPV is –$221,275.39 and the IRR is 9.97%.
	c.	No, the rounded NPV is –$57,277.32 and the IRR is 8.75%.
	d.	Yes, the rounded NPV is $228, 940.00 and the IRR is 46.62%.

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