Interpret and analyze hurdle rates, return on equity, and project selection. Custom Essay

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Create an Excel spreadsheet for a production plant with the following criteria: •The company will lease for 5 years at $1,500,000 per year. •It will cost the firm $4,000,000 in capital (straight-line depreciation, 5 year life) in year 0. •It will cost the firm an additional $150,000 per year after the new production plant is brought online for other expenses. •It will generate incremental revenue of $3,500,000 per year. Use a 40% tax rate, a 10% cost of capital, and a 12% reinvestment rate. Assume the company will use cash flow to finance the project. In the excel document, please answer the following questions: 1)indicate how the project would fair under hurdle rate scenarios of 10%, 15%, and 20% (based on MIRR). 2)Articulate how companies make project selection decisions

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