Aalesund Fotballklubb is a Norwegian football team with a long tradition of winning. However, the last three years have been traumatic. The team has not won a major championship, and attendance at games has dropped considerably. Norsk Fiskevr AS is Aalesund Fotballklubbs major corporate sponsor. Sverre Aspelund, the president of Norsk Fiskevr, is also the president of Aalesund Fotballklubb. Sverre proposes that the team purchase the services of Brazilian star, Monteiro. Monteiro would create great excitement for Aalesund Fotballklubbs fans and sponsors. Monteiros agent notifies Aspelund that terms for the superstars signing with Aalesund Fotballklubb are a bonus of NOK 3 million payable now (start of 2015) plus the following four-year contract (assume all amounts are in millions and are paid at the end of each year):

YEARS	2016(NOK)	2017(NOK)	2018(NOK)	2019(NOK)
SALARY	4.5	5	6	6.5
LIVING AND OTHER COSTS	1	1.2	1.3	1.4

Aspelunds initial reaction is one of horror. As president of Norsk Fiskevr, he has never earned more than NOK 800 000 a year. However, he swallows his pride and decides to exam- ine the expected additions to Aalesund Fotballklubbs cash inflows if Monteiro is signed for the four-year contract (assume all cash inflows are in millions and are received at the end of each year):

YEARS	2016(NOK)	2017(NOK)	2018(NOK)	2019(NOK)
NET GATE RECEIPTS	2	3	3	3
CORPORATE SPONSORSHIP	3	3.5	4	4
TELEVISION ROYALTIES	0	1.2	1.4	2
MERCHANDIZE INCOME ( NET OF COST)	0.6	0.6	0.7	0.7

Aspelund believes that a 12% required rate of return is appropriate for investments by Aalesund Fotballklubb.

Required:

For Monteiros proposed four-year contract, calculate

1. The net present value

and 2. The payback period.