1.) A magazine publisher wants to launch a new magazine geared to college students. The project's initial investment is $580. The project's cash flows are $170 for 11 consecutive years beginning one year from today. What is the project's NPV if the required rate of return is 8.75%? $

2.)A research division of a large consumer electronics company has developed a new type of mp3 player. The production costs for this project are an immediate $1,665,321. The new product will produce new cash flows of $500,000 a year for 4 consecutive years beginning in year 1. What is the internal rate of return of this project?

%

3.)A manufacturer of backpacks plans to introduce a new line. Equipment and production costs will be incurred immediately and will total $7,272,727. The company expects to earn a profit of $20 per backpack, and sales are estimated to be 100,000 in the first year (assume that the cash flow comes in at the end of the year). Sales are then expected to grow by 10% per year in each of the next three years (in year 2, year 3, and year 4) but the price is expected to remain at $20 throughout. What is the internal rate of return of this project?

% Place your answer in percentage form with no percentage sign. That is, if your answer is four point eight eight percent, you should enter that value as 4.88. Should the company produce the backpacks if the required rate of return is 12%? (Yes or No)

4.)A cookie company wants to expand its retail operations. Based on a preliminary study, 10 stores are feasible in various parts of the country. The cash flow at each store is expected to be $150000 in the first year and grow by 10.00% per year over the next 4 years (in years 2, 3, 4 and 5). At that point the project ends. Each store requires an immediate investment of $600000 to set up operations. Assuming a required rate of return 6.00%, what is the NPV of each store?

$

5.)This question is a variant of the Sport Hotel example that was presented in class, in the class notes, and in the Real Option chapter. Suppose that the value of the hotel is not $8 million but instead is $8.6 million if the city is successful in obtaining the franchise, and is not $2 million but instead is $3.5 if the city is not successful in obtaining the franchise. All other aspects of the problem are the same as originally presented. Incorporating these new values, and the real option, what is the new NPV of the project?

$ million