NPV rule

Suppose you consider launching a balloon ride business. Just after the Balloon Fiesta was over this year, a

hot air balloon is up for sale, and you can purchase it today for $$80,000.$ Once taken, the balloon is expected

to bring $$110,000$ as benefits one year from now by providing rides in the next fiesta. The interest rate is

$8\%$ per year.

$($a$)$ What is the NPV of this opportunity? According to the NPV rule, is it worth investing?

$($b$)$ Suppose that you have no cash in hand. Instead, you try to finance the purchase by borrowing money

from a bank with the promise to repay $$110,000$ in one year. What is the resulting cash flow from the

opportunity and the bank loan combined? Present the table listing actions and cash flows today and

year $1.$

$($c$)$ If you launch the business by taking this opportunity, how much would the company be worth? $($Note

that the company is worth nothing before this opportunity$).$