Finance-Cleveland Clinic has been asked to provide exclusive healthcare services

Question
Cleveland Clinic has been asked to provide exclusive healthcare services for the 2013-2014 World Exposition. Although flattered by the request, the clinic’s managers want to conduct a financial analysis of the project. There will be an up-front cost of $240,000 to get the clinic in operation. Then, a net cash inflow of $1.5 million is expected from the operations in each of the two years of the exposition. However, the clinic has to pay the organizers of the exposition a fee for the marketing value of the opportunity. This fee, which must be paid at the end of the second year, is $500,000.

a) what are the cash flows associated with the project?

b) what is the project’s IRR?

c) Assuming a project cost of capital of 8 percent, what is the project’s NPV?