1. Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of

$6,000,000

and would generate annual net cash inflows of

$1,200,000

per year for

9

years. Calculate the project's NPV using a discount rate of

7

percent.

2. Carson Trucking is considering whether to expand its regional service center in Mohab, UT. The expansion requires the expenditure of

$10,500,000

on new service equipment and would generate annual net cash inflows from reduced costs of operations equal to

$3,500,000

per year for each of the next

6

years. In year

6

the firm will also get back a cash flow equal to the salvage value of the equipment, which is valued at

$0.9

million. Thus, in year

6

the investment cash inflow totals

$4,400,000.

Calculate the project's NPV using a discount rate of

6

percent