You are considering to start your own podcast show. It will take you a year to develop a concept and produce a series of 5 pilot episodes. The expected development costs are $85.00 thousand. For simplicity, assume that the entire $85.00 thousand is spent immediately, i.e., in Year 0. The podcast will be launched one year from now (i.e., in Year 1), and you expect the cash flows to be $20.00 thousand one year after the podcast is released, i.e., in Year 2. For the subsequent 4 years, you expect cash flows to be $25.00 thousand per year, i.e., in Year 3, Year 4, Year 5, and Year 6 cash flows will be 25.00 thousand.

a) What is the payback period for this investment?
(b) If you require a payback period of six years, will you make the podcast?

(c) What is the NPV of the project if the cost of capital is 14.00%?

(d) Does the NPV rule agree with the payback rule in this case?

A project for an industrial settlement is under analysis, the expected monthly production in physical units is modelled through a uniform distribution U(2.5.4.1) x1000 units The projected product price has a seasonal behavior with index multipliers as given in the table and a drift of 0.5% per year (aritmetic), from an initial value of 50 MU/PU, Season Multiplier Spring Summer 1.5 Autum 1 Winter 2 Table 1. Seasonal multiplier of production to be applied to average value The investment cost is distributed during 4 years previous to production T Capital (Yr) Expenses (KMU) 1 1,500 2 40,000 3 60,000 4 50,000 Table 2. Investment cost The expected life of the project is 25 years after operation is launched at t-5. There is an expected salvage value of 5% of CAPEX (invested in periods form 2 to 4). The operational cost and materials required ad to 10 MU/PU, whereas the annual maintenance cost follows an annual distribution of U(5000,17500) (MU). There is an extraordinary maintenance operation every 5 years with a direct cost of 35,000 MU that will stop production during 4 months to be developed during spring (3 months) and summer (1 months). Obtain the annual equivalent to revenues, ordinary maintenance cost and extraordinary maintenace. (1p) . Obtain the availability to pay for a reduction of 4 months production stop for extraordinary maintenance and repair. (1p) Obtain NPV, LCOP, TIR, B/C ratio, pay-back. (4p) . Test the sensitivity of each one of the indicators to each one of the proposed parameters (2p) Develop a risk analysis for the project. For this purpose use the projected distributions and, if a parameter with unknown randomness is selected for the analysis, use uniform distribution with given data as media X and standard deviation between 10% o 20% of X (select as appropiate). (2p) www ***