I just need to verify that these IRRs are correct. Your firm has been hired to develop new software for the university's class registration system. Under the contract, you will receive $500,000 as anupfront payment. You expect the development costs to be $447,000 per year for the next 3 years. Once the new system is in place, you will receivea final payment of $881,000 from the university 4 years from now.a. What are the IRRs of this opportunity? (Hint: Build an Excel model which tests the NPV at 1% intervals from 1% to 40%. Then zero in on therates at which the NPV changes signs.)b. If your cost of capital is 10%, is the opportunity attractive?Suppose you are able to renegotiate the terms of the contract so that your final payment in year 4 will be $1.2 million.c. What is the IRR of the opportunity now?d. Is it attractive at the new terms?...The IRRs of the project in ascending order are 6.75% and 31.68 %. (Round to two decimal places.)b. If your cost of capital is 10%, is the opportunity attractive?If your cost of capital is 10%, the opportunity is not attractive (Select from the drop-down menu.)●

Data given: Year CF 1 0 500000 1 -447000 2 -447000 3 -447000 4 881000 To check…

Answered: I just need to verify that these IRRs…

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter26: Capital Budgeting (capbud)

Section: Chapter Questions

Problem 5R

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