A 5-year annuity of ten $5,300 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now.

If the discount rate is 12 percent compounded monthly, what is the value of this annuity five years from now?

If the discount rate is 12 percent compounded monthly, what is the value three years from now?

If the discount rate is 12 percent compounded monthly, what is the current value of the annuity?

Applied Nanotech is thinking about introducing a new surface cleaning machine. The marketing department has come up with the estimate that Applied Nanotech can sell 15 units per year at $305,000 net cash flow per unit for the next five years. The engineering department has come up with the estimate that developing the machine will take a $15 million initial investment. The finance department has estimated that a 16 percent discount rate should be used.

a.

What is the base-case NPV? If unsuccessful, after the first year the project can be dismantled and will have an aftertax salvage value of $11 million. Also, after the first year, expected Cashflows will be revised up to 20 units per year or to 0 units, with equal probability. What is the revised NPV?