Question

A new computer system will require an initial outlay of $15,650, but it will increase the firm’s cash flows by $3,400 a year for each of the next 7 years. Calculate the NPV and decide if the system is worth installing if the required rate of return is 10%. Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. Calculate the NPV and decide if the system is worth installing if the required rate of return is 15%. Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. How high can the discount rate be before you would reject the project? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.

          A new computer system will require an initial outlay of $15,650, but it will increase the firm’s cash flows by $3,400 a year for each of the next 7 years.
Calculate the NPV and decide if the system is worth installing if the required rate of return is 10%.
Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.
Calculate the NPV and decide if the system is worth installing if the required rate of return is 15%.
Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.
How high can the discount rate be before you would reject the project?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.

Added by Mark J.

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