Question
A firm is considering sponsoring a pavilion at the upcoming world's fair. the pavilion would cost $80,000, and it is expected to result in $5million
A firm is considering sponsoring a pavilion at the upcoming world's fair. the pavilion would cost $80,000, and it is expected to result in $5million of incremental cash inflows during its 1 year of operation, however, it would take another year and $5million of costs, to demolish the site and return it to its original condition. Thus, Project P's expected cash flows (in millions of dollars) look like this, -$0.8, $5.0, -$5.0. The project has a WACC of 10%. 1. What is the NPV, IRR, and the payback period? 2. Is the project worthy, why or why not?
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