- Identify which of the following might be something an NPV Profile might be used for. Check all that apply.a.An NPV Profile indicates if there is a conflict between the NPV and the Profitability Indexb.An NPV Profile can indicate which project is the best at a given required rate of return given two mutually exclusive projectsc.An NPV Profile can indicate if a project has more than one internal rate of returnd.An NPV Profile can indicate if the profitability of a project is sensitive to changes in the initial outlaye.An NPV Profile can show how the NPV might change if the estimate for the required rate of return is uncertain.f.An NPV Profile can indicate the NPV of a project at various internal rates of return.
2. Suppose that a company purchased some land 5 years ago for $1,000,000 and they now want to use this land to build a new manufacturing plant. Recently they received an offer from a commercial real estate firm to purchase the land for $1,500,000. However, the company prefers to build a plant on that land instead, assuming the project is profitable. To build the plant, they must first remove some trees and an existing structure at a cost of $500,000. The construction of the plant itself will cost $3,000,000. What is the proper cash flow to use as the initial investment for this project?