Question: 1. Siemens AG invests €80 million to build a manufacturing plant to build wind turbines. The company predicts net cash flows of €16 million per year for the next 8 years. Assume the company requires an 8% rate of return from its investments.
(1) What is the payback period of this investment?
(2) What is the net present value of this investment?
2. Palm has many types of costs. What is an out of pocket cost? What is an opportunity cost? Are opportunity costs recorded in the accounting records?