Judy Nakamura is the risk manager of Hardin-Ferris Company (HFC), a wood products company. Several questions have come up that will require calculations. Perform the following calculations for Judy. Show your work as partial credit may be awarded. Points are as indicated.

Judy is considering augmenting the sprinkler system in a building where plywood is manufactured. The cost of this risk control investment is $125,000. The project will generate an after-tax net cash flow of $60,000 one year after investment, an after-tax net cash flow of $50,000 two years after investment, and an after-tax net cash flow of $40,000 three years after investment. Assuming a 7 percent discount rate, what is the net present value (NPV) of this project? (2 points)

c. HFC owns a storage building where finished lumber and plywood are stored before these products are shipped to retail outlets. Judy insured the storage building for $150,000 under a property insurance policy that included an 80 percent coinsurance clause. When the building was valued at $200,000 it was damaged by a windstorm. The damage was $32,000. Assuming wind is an insured peril and that the policy does not include a deductible, how much will HFC collect from its insurer to settle this claim? (1.5 points)