Managers of CVS Pharmacy are considering a new project. This project would be a new store in Odessa, Texas. They estimate the following expected net cash flows if the project is adopted. Year 0: ($1,250,000) Year 1: $200,000 Year 2: $500,000 Year 3: $400,000 Year 4: $300,000 Year 5: $200,000 Suppose that the appropriate discount rate for this project is 7.7%, compounded annually. Calculate the net present value for this proposed project. Do not round at intermediate steps in your calculation. Round your answer to the nearest dollar. If the NPV is negative, include a minus sign. Do not type the $ symbol.

Maroon Limited is deciding whether to invest in a new machine. The new machine will increase cash flow by $250,000 per year. You believe the technology used in the machine has a 10-year life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine is currently priced at $1,700,000. The cost of the machine will decline by $165,000 per year until it reaches $1,040,000, where it will remain.

If your required return is 8 percent, which year should Maroon Limited purchase the machine?

What is the NPV if you purchase the machine in the optimal year?

A major car manufacturer wants to test a new engine to determine if it meets new air pollution standards. The mean emission, mu of all engines of this type must be approximately 20 parts per million of carbon. If it is higher than that, they will have to redesign parts of the engine. Ten engines are manufactured for testing purposes and the emission level of each is determined. Based on data collected over the years from a variety of engines, it seems reasonable to assume that emission levels of all new engines are roughly Normally distributed with sigma = 3. If the mean emission of all engines is, in fact, mu=22, what is the power in general and what is power of this test? (Assume 5% significance level)

Fed Ex has been experimenting with a new logistical service. With this new contract, there is a 30% chance that freight in shipping containers will be damaged by the contractor, resulting in a $10,000 loss of total value, on average. Otherwise, the full value of the cargo is realized, $100,000.

If Fed Ex is offered an insurance policy to protect them from loss at $4,000 per container, would should they buy the insurance?

None of these

yes, because the firm is risk averse yes, because they save $1000 of the expected loss

no, because the firm is better off gambling with the freight loss

no, because they can take the risk and be better off

How the elements of a new venture team effects the efficiency of your new business and identify the common errors made in putting togthera new venture team (8)