P$12-5$A Goldbloom Corp. is thinking about opening a soccer camp in southern California. To start the camp, Goldbloom would need to purchase land and build four soccer fi elds and a sleeping and dining facility to house $150$ soccer players. Each year, the camp would be run for $8$ sessions of $1$ week each. The company would hire college soccer players as coaches. The camp attendees would be male and female soccer players ages $1218.$ Property values in southern California have enjoyed a steady increase in value. It is expected that after using the facility for $20$ years, Goldbloom can sell the property for more than it was originally purchased for. The following amounts have been estimated. Cost of land $$300,000$ Cost to build soccer fi elds, dorm and dining facility $$600,000$ Annual cash infl ows assuming $150$ players and $8$ weeks $$940,000$ Annual cash outfl ows $$840,000$ Estimated useful life $20$ years Salvage value $$1,500,000$ Discount rate $8\%$ Instructions $($a$)$ Calculate the net present value of the project. $($b$)$ To gauge the sensitivity of the project to these estimates, assume that if only $125$ players attend each week, annual cash infl ows will be $$800,000$ and annual cash outfl ows will be $$750,000.$ What is the net present value using these alternative estimates? Discuss your fi ndings. $($c$)$ Assuming the original facts, what is the net present value if the project is actually riskier than fi rst assumed and an $11\%$ discount rate is more appropriate? $($d$)$ Assume that during the fi rst $5$ years, the annual net cash fl ows each year were only $$40,000.$ At the end of the fi fth year, the company is running low on cash, so management decides to sell the property for $$1,332,000.$ What was the actual internal rate of return on the project? Explain how this return was possible given that the camp did not appear to be successful