I’m working on a business case study and need support to help me study.5. Should the erosion of profits from regular cranapple sales be charged to the lite cranapple project? What if management believed that, if Cranfield did not introduce the product, a competing firm very likely would, so regular cranapple sales would be aversely affected regardless of whether the project in question is accepted?undefined9. Assume that the sales price will increase by 5% inflation beginning after year 0. However, cash operating costs will increase by only 2% annually from the initial cost estimate, because over half the costs are depreciation or fixed by long-term contracts. For simplicity, assume no other cash flows (net cannibalization costs, salvage value or net working capital) are affected by inflation. undefinedWhat is Cranfield’s year 0 net investment outlay on this project? What is the expected non-operating cash flow when the project is terminated at Year 4?
Estimate the product’s operating cash flows inclusive of cannibalization affects. What is the project’s NPV, IRR, MIRR and payback? Should the project be undertaken?
Find the projects NPV, IRR MIRR and payback with inflation considered. (Hint: The Year 1 cash flows as well as succeeding years’ cash flows must be adjusted for inflation because the original estimates were in Year 0 dollars.)
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