5-4. Conway Auto is considering a new business development program. Anticipated benefits are $100,000 in the first year, $200,000 in the second year, and $400,000 in the third year. Benefits will decline 10% a year after the third year, and will end after the tenth year. Assume these benefits are received at year-end. The effective required return in 10%. What is the present value of these benefit? If the development program requires an initial outlay of $500,000, what is the net present value? 5-5. Alborg Corporation is considering the introduction of a new product. The required investment is $1 million, and anticipated year-end cash flows are as follows: 3 Year 2 Cash Flow $300,000 $400,000 Compute the net present value using a 10% required return. $500,000 $200,000 5-7. A machine can be purchased today for $1 million. It will generate cash flows of $200,000 at the end of each year for 10 years. However, a $300,000 overhaul will be required at the end of year 5. At a 10% opportunity cost of money, compute the net present value of this investment. 5-10. Beta Corporation pay a 40% tax rate. A new $3 million investment will generate after-tax cash flows of $1 million a year for 4 years if the company uses no debt. The company will, however, use debt equal to 60% of the present value of future cash flows. Pre-tax interest on debt is 10%, and stockholders require a 16% return on their investment a. Compute the net present value of the capital investment using a weighted average cost of capital b. Compute the net present value of the cash flows to and from shareholders using the shareholder's required return