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

Kaleo has made up his mind—he wants a pool in the family’s backyard! He figures his kids and spouse will be thrilled. However, to cover the cost of the pool, they’ll have to pack up and live away from home for a few weeks during the summer to rent their home to vacationers. He crunched the numbers based on the following estimates. 1. Cost of pool/installation   $50,000 2. Life of the pool (no salvage value)   20 years 3. Annual net cash inflows from renting (net of cash expenses for renting and pool maintenance)   $6,500 4. Tax rate   23% 5. Average rate of return    8% Kaleo’s daughter, Sarah, found the above information written on a sheet of paper in his office, along with the following notes. “This is a no-brainer! We’ll recover the cost of this pool in just 7 years, even though we plan to live here until we’re old and gray, or at least as long as the pool hangs on. If we can rent our house out for just 3 weeks each year, it’ll be almost pure profit that we can put toward paying off…

Coronado Skateboards is considering building a new plant. David Al-Saigh, the company's marketing manager, is an enthusiastic supporter of the new plant. Jennifer Miller, the company's chief financial officer, is not so sure that the plant is a good idea. Currently, the company purchases its skateboards from foreign manufacturers. The following figures were estimated for the construction of a new plant: Cost of plant Annual cash inflows Annual cash outflows Estimated useful life Salvage value Discount rate $6,360,000 $6,360,000 $5,883,000 15 years $1,060,000 David believes that these figures understate the true potential value of the plant. He suggests that by manufacturing its own skateboards the company will benefit from a "buy Canadian" patriotism. He also notes that the firm has had numerous quality problems with the skateboards manufactured by its suppliers. He suggests that the inconsistent quality has resulted in lost sales, increased warranty claims, and some costly lawsuits.…

3) New Project Investment| Wally loves your analysis. He has now asked you to evaluate potential new project investments. Both projects aim to make widgets. Widgets sell for $10 each. Project A will produce 4,500 units in the first year, 6,500 units in the second and third years and a whopping 44,000 units in the fourth year. Project A requires an investment of 7 machines each costing $50,000. Project B will produce 2,400 units in the first year, 2,200 units in the second year, 1,950 units in the third year and 1,460 units in the fourth year. Project B requires an initial investment of 1 machine worth $50,000. Wally has said that to make the analysis easier - you need not calculate depreciation on the machine, the tax shelter benefit or the residual value of the machine at the end of production. Wally just said I want you understand the cash flows from the information provided above. (a) Calculate the net present value for each of Project A and Project B, assuming a 15% cost of…