great lakes clinic has been asked to provide exclusive healthcare services for next year's world exposition. although flattered by the request, the clinic's managers want to conduct a financial analysis of the project. there will be an up front cost of $160,000 to get the clinic in operation. then, a net cash inflow of $1 million is expected from operations in each of the two years of the exposition. however, the clinic has to py the organizers of the exposition a fee for the marketing value of the opportunity. this fee, which must be paid at th end of the second year, is $2 million. a. what are the cash flows associated with the project? b. what is the project's IRR? c. assuming a project cost of capital of 10 percent, what is the project's NPV?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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great lakes clinic has been asked to provide exclusive healthcare services for next year's world exposition. although flattered by the request, the clinic's managers want to conduct a financial analysis of the project. there will be an up front cost of $160,000 to get the clinic in operation. then, a net cash inflow of $1 million is expected from operations in each of the two years of the exposition. however, the clinic has to py the organizers of the exposition a fee for the marketing value of the opportunity. this fee, which must be paid at th end of the second year, is $2 million.
a. what are the cash flows associated with the project?
b. what is the project's IRR?
c. assuming a project cost of capital of 10 percent, what is the project's NPV

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