13)

George is interested in buying one of the two local businesses on sale: a Coffee Shop or a Shoe Store. The cashflows of both the businesses are shown below. George can borrow from a bank at a rate of 8.00% to buy Coffee Shop and 6.00% to buy Shoe Store

Coffee Shop	Shoe Store	Year
-$115,000	-$115,000	0 (Purchase Price)
$7,188	$51,750	1
$21,562	$38,812	2
$40,250	$28,750	3
$50,315	$21,563	4
$57,500	$14,375	5

If George buys the Coffee Shop instead of Shoe Store, How much extra NPV will he get? Enter your answer in the following format: + or - 1,234; Hint1: Answer is between -1,882 and -2,283 Hint2: Compute NPV(Coffee Shop) - NPV (Shoe Store).

15)

Stacy and John lend small amounts to other students in need. Their yearly cashflows are shown below.

Both of them can borrow or save from a bank on campus at an annual rate of 10.00%.

Stacy	John	Year
-$300	-$405	0
-$387	$134	1
-$193	$134	2
-$100	$134	3
$600	$134	4
$600	$134	5
$850	$134	6
-$180	$0	7

How much is the NPV (net present value) of Stacy's project?

18)

George is interested in buying one of the two local businesses on sale: a Coffee Shop or a Shoe Store. The cashflows of both the businesses are shown below. George can borrow from a bank at a rate of 8.00% to buy Coffee Shop and 6.00% to buy Shoe Store

Coffee Shop	Shoe Store	Year
-$115,000	-$115,000	0 (Purchase Price)
$7,188	$51,750	1
$21,562	$38,812	2
$40,250	$28,750	3
$50,315	$21,563	4
$57,500	$14,375	5

How much is the NPV at the crossover rate? At crossover rate, both projects have the same NPV. Enter your answer in the following format: + or - 1,234; Hint: Answer is between 7,831 and 9,610