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4. The Thousand Oak Hospital has estimated its cash flows, listed as follows: Year Expected Net Cash Flow 0 ($1,000,000) 1 $150,000 2 $255,000 3

4. The Thousand Oak Hospital has estimated its cash flows, listed as follows: Year Expected Net Cash Flow 0 ($1,000,000) 1 $150,000 2 $255,000 3 $267,000 4 $350,000 5 $305,000 The year 0 cash flow is the investment cost. The later years are their cash flow from the operation. Thousand Oak Hospital's corporate cost of capital is 12% A. What is the project's payback (time)? Please use cumulative cash flow (list your table) to find it (10%) B. Assuming the project has average risk, What is its NPV (5%) C. What is the project's IRR? (5%) D. Based on your answers B) and C), is it a project worth investing? Why? (5%)

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