Prepared by Keyi Xu
Problem 1 (1 points)
Year
Year
Year
Year
0
1
2
3
Operation CF
$200,000
$200,000
$200,000
Capital CF
N/A
Net
$200,000
$200,000
$200,000
89%
80%
71%
PV
$178,571.43
$159,438.78
$142,356.05
Total NPV (sum of the above row) =
$1,761,237.81
Problem 2 (3 points)
Year
Year
Year
Year
0
1
2
3
Operation CF
$200,000
$200,000
$200,000
Capital CF
N/A
Discount Rate for intralease
10%
10%
10%
PV of operatoin
$181,818.18
$165,289.26
$150,262.96
Discount Rate for interlease
N/A
N/A
N/A
PV of operatoin
$181,818.18
$165,289.26
$150,262.96
Total NPV (sum of the above row) =
$1,774,118.35
Problem 3 (5 points)
Year
Year
Year
Year
0
1
2
3
Operation CF
$200,000
$200,000
$200,000
Capital CF
at 10%
-$2,000,000
Net
-$2,000,000
$200,000
$200,000
$200,000
89%
80%
71%
PV
-$2,000,000
$178,571.43
$159,438.78
$142,356.05
a.
Total NPV (sum of the above row)
=
-$238,762.19
1 point
b.
IRR
=
9.86% 1 point
c.
Ini Cash Flow at Ini Yield
=
10.00% 1 point
d.
Yield of Subsequent Cash Flow Growth =
0.97% 1 point
Year
Year
Year
Year
0
1
2
3
Operation CF
$200,000
$200,000
$200,000
-$2,000,000
Net
-$2,000,000
$200,000
$200,000
$200,000
e. Yield of valuation change
=
-1.10% 1 point
Year
Year
Year
Year
0
1
2
3
Operation CF
$200,000
$200,000
$200,000
-$2,000,000
Net
-$2,000,000
$200,000
$200,000
$200,000
Discount Factor (all at
12%
)
Discount Factor (all at
10%
)
Capital CF
at
10%
Capital CF
at
10%