A hospital contracted with you to wash all their linens. It costs $50,000 now to buy the necessary washing machines and will cost an additional $30,000 in one year to pay for labor, water and electricity. The hospital will pay you $140,000 in one year.

There is no risk that the hospital will default. The risk-free interest rate is 7%.

Attempt 1/3 for 10 pts.

Part 1

What is the NPV of the contract?