please answer the 3 parts a, b,c P24-5A Coolplay Corp. is thinking about opening a soccer camp in southern California.To start the camp, Coolplay would need to purchase land and build four soccer fields and asleeping and dining facility to house 150 soccer players. Each year, the camp would be runfor 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 12-18. Property valuesin southern California have enjoyed a steady increase in value. It is expected that afterusing the facility for 20 years, Coolplay can sell the property for more than it was originallypurchased for. The following amounts have been estimated.Cost of landCost to build soccer fields, dorm and dining facilityAnnual cash inflows assuming 150 players and 8 weeksAnnual cash outflowsEstimated useful lifeSalvage valueDiscount rate$300,000$600,000$920,000$840,00020 years$1,500,0008%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 playersattend each week, annual cash inflows will be $805,000 and annual cash outflows willbe $750,000. What is the net present value using these alternative estimates? Discussyour findings.(c) Assuming the original facts, what is the net present value if the project is actuallyriskier than first assumed and an 10% discount rate is more appropriate?(a(d) Assume that durin

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Discount rate Instructions (a) Calculate the net present value of the project. (b) To gange the

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

please answer the 3 parts a, b,c

P24-5A Coolplay Corp. is thinking about opening a soccer camp in southern California.
To start the camp, Coolplay would need to purchase land and build four soccer fields 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 12-18. Property values
in southern California have enjoyed a steady increase in value. It is expected that after
using the facility for 20 years, Coolplay can sell the property for more than it was originally
purchased for. The following amounts have been estimated.
Cost of land
Cost to build soccer fields, dorm and dining facility
Annual cash inflows assuming 150 players and 8 weeks
Annual cash outflows
Estimated useful life
Salvage value
Discount rate
$300,000
$600,000
$920,000
$840,000
20 years
$1,500,000
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 inflows will be $805,000 and annual cash outflows will
be $750,000. What is the net present value using these alternative estimates? Discuss
your findings.
(c) Assuming the original facts, what is the net present value if the project is actually
riskier than first assumed and an 10% discount rate is more appropriate?
(a
(d) Assume that durin

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