1.

Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $5,500,000 and would generate annual net cash inflows. of $900,000 per year for 6years. Calculate theproject's NPV using a discount rate of 7 percent.

a. If the discount rate is 7 percent, then theproject's NPV is ?

2.

Carson Trucking is considering whether to expand its regional service center inMohab, UT. The expansion requires the expenditure of $9,500,000 on new service equipment and would generate annual net cash inflows from reduced costs of operations equal to $2,000,000 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 theequipment, which is valued at $1.1 million. Thus, in year 6 the investment cash inflow totals $ 3,100,000. Calculate theproject's NPV using a discount rate of 10 percent.

a. If the discount rate is 10 percent, then theproject's NPV is?