28) A firm is adding a new blast furnace to its operation. The new furnace will cost $28.00 million and will require a few old parts that the firm has in inventory. The firm could otherwise sell these parts today for $419,161.00. The book value of these parts at the moment is $94,196.00. If the tax rate facing the firm is 37.00%, what is the opportunity cost of using the parts? (express as a positive number)

29) A firm decides to expand its operations and use more square footage in their main office. Currently, they rent out 3000 square feet of space at a rate of $3,156.00 per month. The new expansion will use this space. The firm has a cost of capital of 9.00% APR. If the tax rate is 37.00% facing the firm, what is the opportunity cost of using this space? (consider this as a perpetuity and express your answer as a positive number)

30) Suppose that Disney is considering one more Toy Story movie. The company is not confident in box office sales, but they do believe that the file will create merchandising opportunities (DVDs, toys, clothes,..etc). Their early analysis believes the move will have an NPV of -$35.00 million if you only look at ticket sales in the theater. However, they also believe that the movie will create sales of $76.00 million per year in merchandise. The merchandise sales will decline each year by 21.00% in perpetuity. Let's assume that after-tax operating margin on these sales is 12.00%, and that Disney has a cost of capital at 9.00%.

a)What is the cash flow created by the merchandise side effect in the first year? (answer in terms of millions, so 1,000,000 would be 1.00)

b)Let's value this as a perpetuity. The merchandise sales will continue indefinitely, BUT the sales will decrease each year. What is the net NPV for creating the movie? (answer in terms of millions, so 1,000,000 would be 1.00)

33) Suppose that Disney wants to follow up on the success of Frozen, with a feature film featuring Olaf the Snowman. The movie will cost $165.00 million to produce, and the producers expect the movie to generate a cash flow of $162.00 million in the first year. After the first year, cash flows will decline to $15.00 million in year 2.

However, the movie will also create synergy within the company. Disney will build a new Olaf ride at Epcot for $41.00 million. Disney suspects that the ride will bring visitors to the park and increase merchandise sales. Disney estimates that sales will increase by $13.00 million per year in PERPETUITY. The after-tax operating margin on these sales is 52.00% for Disney.

The cost of capital for Disney is 11.00%.

a) What is the NPV of this project without any synergy from the new Olaf ride? (express in terms of millions)

b) If we add the PV of the side effects to the NPV, what is the total value of this project? (express in terms of millions)