An example from previous exam: A concert organizer is considering entering into a contract with the municipality to be able to use another site outdoor concerts for a period of three years. NOK 22 million must be invested initially. The cash flow with star artists in years 1 and 2 will be NOK 33 and 60 million respectively. In the last year of operation, year 3, the concert organizer must commit to making a number of upgrades to the plot. This means a cash flow of minus NOK 80 million in year 3. a) What is the net present value (NPV) if the return requirement is 20%? b) Illustrate the present value profile of the project graphically for return requirements between 0% and 100%.
An example from previous exam: A concert organizer is considering entering into a contract with the municipality to be able to use another site outdoor concerts for a period of three years. NOK 22 million must be invested initially.
The cash flow with star artists in years 1 and 2 will be NOK 33 and 60 million respectively. In the last
year of operation, year 3, the concert organizer must commit to making a number of upgrades to
the plot. This means a cash flow of minus NOK 80 million in year 3.
a) What is the
b) Illustrate the present value profile of the project graphically for return requirements between 0% and 100%.
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