1. Crown Point Florist is considering replacing an old refrigeration unit with a larger unit to store flowers. Because the new refrigeration unit has a larger capacity, Crown Point estimates that it can sell an additional $8,500 of flowers a year. (The cost of the flowers is $4,800). In addition, the new unit is energy efficient and should save $2,352 in electricity each year. It will cost an extra $3,360 per year for maintenance. The new refrigeration unit costs $24,000 and has an expected life of 10 years. The old unit is fully depreciated and can be sold for an amount equal to disposal cost. At the end of 10 years, the new unit has an expected residual value of $4,704.Determine the net present value of the investment if the required rate of return is 13 percent. (Ignore taxes.). what is the net present value $?
2. Canarie Productions is evaluating a film project. The president of Canarie estimates that the film will cost $20,000,000 to produce. In its first year, the film is expected to generate $16,172,000 in net revenue, after which the film will be released to video. Video is expected to generate $10,259,000 in net revenue in its first year, $2,432,500 in its second year, and $1,025,400 in its third year. For tax purposes, amortization of the cost of the film will be $12,000,000 in year 1 and $8,000,000 in year 2. The company's tax rate is 40 percent, and the company requires a 12 percent rate of return on its films.What is the net present value of the film project? To simplify, assume that all outlays to produce the film occur at time 0.
3. An investment that costs $79,900 will return $33,200 per year for 5 years.Determine the net present value of the investment if the required rate of return is 16 percent. (Ignore taxes.)