A new computer system will require an initial outlay of $20,000, but it will increase the...

A new computer system will require an initial outlay of $20,000, but it will increase the firm’s cash flows by $4,300 a year for each of the next 8 years.

a. Calculate the NPV and decide if the system is worth installing if the required rate of return is 9%. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)

b. Calculate the NPV and decide if the system is worth installing if the required rate of return is 14%. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)

c. How high can the discount rate be before you would reject the project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Expert Solution

jeff jeffy answered 2 years ago

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