1.Hidden Valley Golf Course is considering installing a new irrigation system on the course. The cost of installing the system is $500,000 and is incurred today. The system will have a useful life of 10 years and can be depreciated in a straight line method. At the end of 10 years, the salvage value will be $10,000. The system will keep the greens and fairways in better condition, thereby attracting more golfers. Based on a market survey, the course will see an incremental increase of 2,500 rounds per year at $40 per round. However, the irrigation system also has maintenance costs of $20,000 per year. Hidden Valley faces a 40% tax rate and has a cost of capital of 11%. Calculate the NPV of the irrigation system.

2.A European soccer team is considering purchasing a star player in the transfer market. To buy the player, the team would have to pay a transfer fee to the player's current team of $9M. The team is also contractually obligated to pay the player a salary of $2M per year for the next 6 years. However, the player is expected to increase the team's performance by 4 wins per year. Historical data shows each additional win is worth approximately $1.5M in revenues from ticket sales. Assume the transfer fee can be depreciated in a straight line manner over the life of the contract, but that the yearly salary cannot be depreciated. The team's tax rate is 30% and relevant discount rate is 4%. Should the team purchase the player?

3.The athletic department is considering replacing the scoreboard at the football stadium. It will cost $2.4M to purchase and install the scoreboard. The scoreboard will have an expected useful life of 15 years and is depreciated using the straight line method. At T=15, the scoreboard will have a salvage value of $100,000, and the current scoreboard has a salvage value of $20,000. The new board is expected to generate an additional 5,000 fans per season at an average ticket price of $20. The athletic department will also be able to sell additional advertising totaling $200,000 per season. However, the electric cost for the new board will be $55,000, compared to current usage of $5,000. The university feels that alternate projects could return 8%. The university also pays no taxes.

4.The Mount Hood Ski Resort is looking to expand its facilities by adding a new ski lift. The initial investment would cost $2,500,000 and would increase annual expenses by $75,000. The new lift would have a useful life of 10 years and a salvage value of $25,000. The increase in skiing capacity would boost revenues by adding 5,000 skiers per year, paying an average of $100 for a lift ticket. Mt. Hood Ski Resort's cost of capital is 6% and is in the 35% tax bracket. What is the net present value of the project?