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give answer in 3 steps with explanation at the end of each step and final answer at the end :Blossom Corp. is thinking about opening a soccer camp in southern California. To start the camp, Blossom 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, Blossom can sell the property for more than it was originally purchased for. The following amounts have been estimated. Cost of land $331,200 Cost to build soccer fields, dorm, and dining facility $662,400 Annual cash inflows assuming 150 players and 8 weeks $1,015,680 Annual cash outflows $927,360 Estimated useful life 20 years Salvage value $1,656,000 Discount rate 8% Click here to view PV table. (@ Calculate the net present value of the project. (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answer to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Netpresetvaboe 3 Should the project be accepted? The project be accepted. eTextbook and Media Attempts: 1 of 3used (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 $888,720 and annual cash outflows will be $828,000. What is the net present value using these alternative estimates? (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answer to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Netpresentlue $ Should the project be accepted? The project should be . eTextbook and Media Attempts: 1 of 3used © 2 I = Youransweris partially correct. 1 Assuming the original facts, what is the net present value if the project is actually riskier than first assumed and a 10% discount rate is more appropriate? (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answer to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Netpesenvalie$ Should the project be accepted? The project be accepted.

Question:

give answer in 3 steps with explanation at the end of each step and final answer at the end :Uploaded ImageBlossom Corp. is thinking about opening a soccer camp in southern California. To start the camp, Blossom 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, Blossom can sell the property for more than it was originally purchased for. The following amounts have been estimated. Cost of land $331,200 Cost to build soccer fields, dorm, and dining facility $662,400 Annual cash inflows assuming 150 players and 8 weeks $1,015,680 Annual cash outflows $927,360 Estimated useful life 20 years Salvage value $1,656,000 Discount rate 8% Click here to view PV table. (@ Calculate the net present value of the project. (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answer to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Netpresetvaboe 3 Should the project be accepted? The project be accepted. eTextbook and Media Attempts: 1 of 3used (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 $888,720 and annual cash outflows will be $828,000. What is the net present value using these alternative estimates? (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answer to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Netpresentlue $ Should the project be accepted? The project should be . eTextbook and Media Attempts: 1 of 3used © 2 I = Youransweris partially correct. 1 Assuming the original facts, what is the net present value if the project is actually riskier than first assumed and a 10% discount rate is more appropriate? (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answer to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Netpesenvalie$ Should the project be accepted? The project be accepted.

This is AI generated Response.
Asked by: Test User 100183
Created at: 2025-05-09 08:55:02

Final Answer:

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Let's break down the answer to part (c) in 3 steps, with explanations after each, and provide the final answer at the end: --- ### **Step 1: Identify Cash Flows** **Explanation:** We use the original estimates from the question: - **Initial Outlay:** Cost of land + Cost to build facility = $331,200 + $662,400 = **$993,600** (cash outflow at year 0) - **Annual Net Cash Inflow:** Annual inflow - Annual outflow = $1,015,680 - $927,360 = **$88,320** (years 1-20) - **Salvage Value:** $1,656,000 (inflow at year 20) --- ### **Step 2: Find Present Value Factors and Calculate Present Values** **Explanation:** We use a **10% discount rate** (since the project is riskier). From PV tables (or using the formula for annuity and single sum): - **PV Factor for 20 years at 10% (annuity):** 8.5136 - **PV Factor for 20 years at 10% (single sum):** 0.1486 Now, calculate each present value: - PV of annual net cash inflows: $88,320 × 8.5136 = **$752,352.19** - PV of salvage value: $1,656,000 × 0.1486 = **$245,061.60** --- ### **Step 3: Compute Net Present Value (NPV)** **Explanation:** Combine all present values and subtract the initial investment: - **NPV = PV of inflows (years 1-20) + PV of salvage value (year 20) - Initial Outlay** - NPV = $752,352.19 + $245,061.60 - $993,600 = **$3,813.79** (rounded to **$3,814**) --- ### **Final Answer** - **Net Present Value:** **$3,814** (rounded to 0 decimal places) - **Should the project be accepted?** **Yes, the project should be accepted** because the NPV is positive (even though it's much smaller due to the higher discount rate). --- **Summary Table:** | Step | Calculation/Explanation | Result | |-----------|---------------------------------------------------------|--------------| | 1 | Initial Outlay, Net Annual Cash Flow, Salvage Value | See above | | 2 | PV Annuity (10%, 20 yr): $88,320×8.5136, PV Salvage | $752,352, $245,062 | | 3 | NPV = Inflows + Salvage - Outlay | $3,814 | **Final NPV = $3,814 (Project should be accepted)** --- Let me know if you need the detailed formulas or a breakdown of the PV table lookup!

Question:

give answer in 3 steps with explanation at the end of each step and final answer at the end : for required questions (a),(b),(C)

This is AI generated Response.
Asked by: Test User 100183
Created at: 2025-05-09 08:57:48

Final Answer:

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Certainly! Here's a detailed, step-by-step solution for parts (a), (b), and (c), with explanations at each step and final answers at the end. --- ### **Part (a): Calculate the net present value (NPV) of the project (using 8% discount rate)** --- **Step 1: Determine initial investment and cash flows** - **Initial costs:** Land = $331,200 Construction = $662,400 **Total initial investment = $331,200 + $662,400 = $993,600** (outflow at year 0) - **Annual net cash inflows:** Inflows = $1,015,680 Outflows = $927,360 **Net annual cash inflow = $1,015,680 - $927,360 = $88,320** - **Salvage value at end of 20 years:** $1,656,000 --- **Step 2: Find present value factors at 8%** - From the PV table, the **annuity factor for 8% over 20 years** is approximately **11.258** (or use precise table value if provided). - The **single sum PV factor for year 20 at 8%** is approximately **0.2145**. --- **Step 3: Calculate the NPV** - **PV of inflows:** $88,320 × 11.258 ≈ **$994,851** - **PV of salvage value:** $1,656,000 × 0.2145 ≈ **$355,037** - **NPV:** (PV of inflows + PV of salvage) – initial investment = $994,851 + $355,037 – $993,600 = **$356,288** **Final answer for (a):** **Net present value = $356,288** **Decision:** Since NPV > 0, **the project should be accepted**. --- ### **Part (b): Adjusted estimates (125 players)** --- **Step 1: Determine new cash flows** - **Annual cash inflow:** Given = $888,720 - **Annual cash outflow:** Given = $828,000 - **Net annual cash flow:** $888,720 – $828,000 = **$60,720** - **Salvage value remains:** $1,656,000 --- **Step 2: Calculate present value factors at 8%** - Same as above: Annuity factor = **11.258** Single sum PV factor = **0.2145** - **PV of inflows:** $60,720 × 11.258 ≈ **$684,453** - **PV of salvage value:** $1,656,000 × 0.2145 ≈ **$355,037** --- **Step 3: Compute NPV** - **NPV:** = $684,453 + $355,037 – $993,600 = **$45,890** **Final answer for (b):** **NPV ≈ $45,890** **Decision:** Since NPV > 0, **the project should be accepted**. --- ### **Part (c): Adjusting for a 10% discount rate** --- **Step 1: Use PV factors at 10%** - **Annuity factor for 20 years at 10%:** approximately **8.5136** - **Single sum PV factor for 20 years at 10%:** approximately **0.1486** - **Annual net cash flow:** From original estimate: $88,320 - **Salvage value:** $1,656,000 --- **Step 2: Calculate present values at 10%** - **PV of inflows:** $88,320 × 8.5136 ≈ **$752,352** - **PV of salvage value:** $1,656,000 × 0.1486 ≈ **$246,422** - **Initial investment:** $993,600 (same as before) --- **Step 3: Calculate NPV** - **NPV:** = $752,352 + $246,422 – $993,600 = **$5,174** **Final answer for (c):** **NPV ≈ $5,174** **Decision:** Since NPV > 0, **the project should be accepted**. --- ### **Summary of answers:** | Part | NPV | Should the project be accepted? | |---------|---------|------------------------------| | (a) | **$356,288** | **Yes** | | (b) | **$45,890** | **Yes** | | (c) | **$5,174** | **Yes** | --- Let me know if you'd like further clarification!

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