MaxiCare Corporation, a not-for-profit organization, specializesin health care for senior citizens. Management is consideringwhether to expand operations by opening a new chain of care centersin the inner city of large metropolitan areas. For a new facility,initial cash outlays for lease, renovations, net working capital,training, and other costs are expected to be about $19 million. Thecorporation expects the cash inflows of each new facility in itsfirst year of operation to equal the initial investment outlay forthe facility. Net cash inflows are expected to increase to $3.0million in each of years 2 and 3; $2.5 million in year 4; and $3.0million in each of years 5 through 10. The lease agreement for thefacility will expire at the end of year 10, and MaxiCare expectsthe cost to close a facility will pretty much exhaust all cashproceeds from the disposal. Cost of capital for MaxiCare isestimated as 12%. Assume that all cash flows occur at year end.

Required:

1. Compute (using the built-in NPV function in Excel) the netpresent value (NPV) the proposed investment. (Negativeamount should be indicated by a minus sign. Enter your answer inwhole dollars, not in millions, rounded to nearest wholedollar.)

2. Compute (using the built-in IRR function in Excel) theinternal rate of return (IRR) for the proposed investment.(Round your final answer 2 decimal places. (i.e. .1234 =12.34%))

3. What is the breakeven selling price for this investment, thatis, the price that would yield an NPV of $0? (Use the Goal Seekfunction in Excel to determine the breakeven selling price. Thefollowing online tutorial may be helpful to you: Goal SeekTutorial.) (Enter your answer in whole dollars, not inmillions, rounded to nearest whole dollar.)