Question
Indio Regional Clinic has been asked to provide exclusive healthcare services for the Coachella Music Festival. Although flattered by the request, the clinics managers want
Indio Regional Clinic has been asked to provide exclusive healthcare services for the Coachella Music Festival. Although flattered by the request, the clinics managers want to conduct a financial analysis of the project. There will be an up-front cost of $160,000 to get the clinic in operation. Then, a net cash inflow of $1 million is expected from operations in each of the next two years. However, the clinic has to pay the organizers a fee for the marketing value of the opportunity. This fee, which must be paid at the end of the second year, is $2 million.
- What are the cash flows associated with the project?
- Assuming a project cost of capital of 10 percent, what is the projects NPV?
(I will thumbs up all answers)
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