Question $3(25$ points$)$Question $4(25$ points$)$

I would like to expand my business by creating a new production line.

Today, I hired a consultant to plan the project, at a cost of $200,000.$

In the first year, I spent $$800,000$ on new machinery.

In the second year, I made $$125,000.$

In the third year, I made $$200,000.$

In the fourth year, I made $$360,000.$

In the fifth year, I made $$620,000.$

During years $6-8,$ I made $$540,000$ each year.

Assuming a discount rate of $7\mathrm{.}1\%,$ what was the NPV of this project?

None of these

$$973,179$

$$1,042,275$

$$1,242,275$

I would like to buy a Cessna Citation M$2$ private jet, which costs $$4,700,000.$ I am

going to get a loan to make this purchase but I won't agree to any terms that force

me to spend more than $$1,000,000$ in interest over the life of the loan $($I am

simultaneously very wealthy yet also a bit of a penny pincher$).$ I am approved for an

eight year aviation finance loan at $6\mathrm{.}4\%$ APR, compounded monthly. I am fine with

any monthly payment amount. Rounded to the nearest dollar, how large of a down

payment should I make so that I can purchase this jet under acceptable terms?

$$985,284$

$$1,340,283$

None of these

$$1,133,125$