Question: Finance help please, help me answer this two part question 1a. An auto-parts company is deciding whether to sponsor a racing team for a cost
Finance help please, help me answer this two part question
1a. "An auto-parts company is deciding whether to sponsor a racing team for a cost of $750000. The sponsorship would last for 5 years and is expected to increase cash flows by $200000 per year. If the discount rate is 5%, what will be the change in the value of the company if it chooses to go ahead with the sponsorship? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."
1b. "The owners of a chain of fast-food restaurants spend $1000000 installing donut makers in all their restaurants. This is expected to increase cash flows by $350000 per year for the next 4 years. The discount rate is 5%. What is the net present value of installing the donut makers?"" Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
