INCORPORATE: answers to the following items and questions in your analysis:
• Part 1: Compare the business cases for each of the projects under consideration by Emily Harris. Are they compatible with New Heritage’s strategy?
• Part 2: Determine the incremental debt-free cash flow for each project (through 2020). Why is a debt-free cash flow used? Why does Free Cash flow exclude all interest?
• Part 3: Determine the discount rate for each project. Do you agree with the proposed rates given in the case? Why or why not?
• Part 4: Use the operating projections for each project to compute the NPV for each. Which project creates more value?
• Part 5: Compute the IRR for each project. Which project should be chosen based on IRR?
• Part 6: What is the relationship between IRR and NPV? Will they lead to the same acceptance or rejection of the decision? Will they lead to the same ranking of projects?
• Part 7: If Harris is forced to recommend one project over the other, which should she recommend? Why?