1. The InterCell Company wants to participate in the upcoming World Fair. To par

Question

1. The InterCell Company wants to participate in the upcoming World Fair. To participate, the firm needs to spend $1 million in year zero to develop a showcase. The showcase will produce a cash flow of $2.5 million at the end of year one. Then, at the end of year two, $1.54 million must be expended to restore the land on which the showcase was presented to its original condition. a. Compute the i* of the investment b. Would you accept the investment at MARR=14%? c. Graph present value as function of i

Explanation / Answer

investment =1 million cash flow =2.5 million expense =1.54 million MARR =14 % NPV =-1 +2.5*0.86-1.54(0.86)^2 =0.011016 million dollars the rate of return I =14.5 % yes i would accept the project cheers :)

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