Alfajores Havanna is considering expanding their product offering in the US market. The expansion will require an upfront expense of $500,000; it is expected to yield cash profits of $85,000 at the end of the first year and $120,000 at the end of each of years 2, 3, and 4. Profits from the product are expected to yield only $80,000 at the end of year 5, after which point the offering will be retired. If the relevant discount rate is 8%, what is the NPV of this project?
					Year	Cash In/Out	PV
					0
					1
					2
3
4
5
Total NPV of All Cash Flows		$ -

Based on the outcome above, is this a good investment alternative? What recommendations might you make to your boss and the product teams?

The product team has come back with some new market research, and revised projections based on some savings found in the upfront investment needed. They now estimate the upfront cost of launching a new product line will cost $400,000, and believe the cash inflows in year 1 will increase from $85,000 to $100,000. If all other projected inflows remain consistent with the above, does this change your answer to the first question? Is this now considered a viable investment?
					Year	Cash In/Out	PV
					0
					1
					2
3
4
5
Total NPV of All Cash Flows		$ -

Based on your analysis, the company decides to proceed with the new product line and opts to fund through debt financing. Alfajores Havanna will issues bonds with an 8% annual coupon with 10 years to maturity (rates in the market, at this time, are also 8% so the bonds sell at Par). Two months later, interest rates (YTM) drop to 6%. Based on this change, what is the price investors would be willing to pay for this bond?
					Par	$ 1.000,00
					Coupon	8,0%
					Years to Maturity	10
Yield to Maturity (YTM)	6,0%
PV (Price) of Bond Today		<-- list your answer here, show work wherever you like