1. A magazine publisher wants to launch a new magazine geared to college students. The start-up costs, due immediately, are $700. The project's expected cash flows are $300 for 4 consecutive years beginning one year from today. What is the project's NPV if the required rate of return is 6.00%?
2. A research division of a large consumer electronics company has developed a new type of mp3 player. The production costs in the current period will be $1,399,100. The new product will produce a cash flow of $500,000 a year for 4 consecutive years beginning in year 1. What is the internal rate of return of this project?
3. A real estate developer plans to construct and then rent a 15-unit office building. The construction costs will be incurred immediately and are expected to be $700. The annual cash flow on all units is expected to be $150 starting in one year and continuing for a total of 3 consecutive years. Calculate the profitability index for the office building using a required rate of return of 12.00%.
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