1. Middlefield Motors is evaluating project Z. The project would require an initial investment of 64,000 dollars that would be depreciated to 5,500 dollars over 5 years using straight-line depreciation. The first annual operating cash flow of 17,000 dollars is expected in 1 year, and annual operating cash flows of 17,000 dollars are expected each year forever. Middlefield Motors expects the project to have an after-tax terminal value of 329,500 dollars in 4 years. The tax rate is 30 percent. What is (X+Y)/Z if X is the project’s relevant expected cash flow in year 4, Y is the project’s relevant expected cash flow in year 5, and Z is the project’s relevant expected cash flow in year 3? Round your answer to 2 decimal places (for example, 2.89, 0.70, or 1.00).

2. What is the net present value of the stadium project, which is a 3-year project where Fairfax Pizza would sell pizza in the baseball stadium? The project would involve an initial investment in equipment of 170,000 dollars today. To finance the project, Fairfax Pizza would borrow 170,000 dollars. The firm would receive 170,000 dollars from the bank today and would pay the bank 221,000 dollars in 3 years (consisting of an interest payment of 51,000 dollars and a principal payment of 170,000 dollars). Cash flows from capital spending would be 0 dollars in year 1, 0 dollars in year 2, and 20,000 dollars in year 3. Operating cash flows are expected to be 108,800 dollars in year 1, 112,200 dollars in year 2, and -52,700 dollars in year 3. The cash flow effects from the change in net working capital are expected to be -17,000 dollars at time 0; 1,000 dollars in year 1; 6,000 dollars in year 2; and 10,000 dollars in year 3. The tax rate is 25 percent. The cost of capital is 17.68 percent and the interest rate on the loan would be 9.14 percent.