= Homework

Homework Question 5, P9-11 (simil... Part20f7 HW Score: 71.43%, 4.29 of 6 points Save Points: 0.29 of2 NPV unequal lives. Grady Enterprises is looking at two project opportunities for a parcel of land the company currently owns. The first project is a restaurant, and the second project is a sports facility. The projected cash flow of the restaurant is an initial cost of $1 with cash flows over the next six years of $150,000 (year one), $220,000 (year two), $330,000 (years three through five), and $1 (year six), at which point Grady plans to sell the restaurant. The sports facility has the following cash flows: an initial cost of $2,320,000 with cash flows over the next four years of $350,000 (years one through three) and $2,690,000 (year four), at which point Grady plans to sell the facility. If the appropriate discount rate for the restaurant is 10.5% and the appropriate discount rate for the sports facility is 1 1.5%, use the NPV to determine which project Grady should choose for the parcel of land. Adjust the NPV for unequal lives with the equivalent annual annuity. Does the decision change? $ 485443.92 (Round to the nearest cent.) If the appropriate discount rate for the sports facility is 11.5%, what is the NPV of the sports facility? $CI (Round to the nearest cent.)