1 A company is considering an investment that requires an immediate investment of $525,000 and an additional investment of $175,000 in year 3. The investment will generate annual profits of $180,000 for five years, starting from year 2 . a. Calculate the IRR for this investment. % Round to two decimal places b. If the cost of capital is 7.5%, should the company undertake the investment? 2 Joseph's hair salon is considering buying airtime for a television commercial to spread the word about their services and get clients during nonpeak hours. Alternatively, they could invest in a cheaper newspaper ad campaign. They forecasted the following cash flows for the two options: Television: Investment of $6,250 would increase profits by $5,700 in the 1st year and $4,300 in the 2 nd year. Newspaper: Investment of $1,250 today would increase profits by $1,600 in the 1st year and $700 in the 2 nd year. 3. Catherine purchased two trucks for his warehouse for a total of $66,000. This investment saved him $15,000 every year for 11 years. At the end of year 11, he sells both the trucks for a total of $14,500. a. What is the Net Present Value (NPV) of the investment if the required rate of return is 8% ? Round to the nearest cent b. Does the investment meet the required rate of return? Yes/No 4. A company is developing a new product. The development of the product requires an initial investment of $150,000 with further investments of $90,000 in year 1,$40,000 in year 2 and $5,000 in year 3 . The company will launch the product on the market in year 3 and the company expects annual profits of $40,000 from year 3 to year 7 . At the end of year 7 , the company expects to terminate the production line and sell it to a competitor for $80,000. The company's required rate of return is 7%. a. Calculate the NPV for this product. Round to the nearest cent