The Clinic has been asked to provide healthcare services for theupcoming Boston Calling concert event and next year’s event. Theyare the sole provider for both years. The clinic’s managers willconduct a financial analysis of the overall two year project. Anup-front cost of $100,000 prior to the Year 1 event (= Year 0Today) is needed to get the on-site clinic ready. , A net cashinflow of $250,000 is expected from the event organizers for eachof the two years bands will perform ($250,00 both Year 1 & Year2). However, Ogunquit Clinic has been also been asked to pay amarketing & branding fee as the exclusive provider of on-sitehealth services. This $300,000 fee must be paid at the close of theBoston Calling event in Year 2. (5 points each, 10 pointstotal)a.Assuming a capital cost of 10%, what is project’s netpresent value (NPV)?b. Assume that the marketing & branding feedoes not have to be paid and the only variables are the $100,000Year 0 Today outflow and the two $250,000 inflows (Saturday &Sunday). What is the project’s internal rate of return (IRR)?
