Clinton City is considering investment in an addition to the community center that is expected to return the following cash flows:

This schedule includes all cash flows from the project. The project will require an immediate cash outlay of $100,000. The city is tax exempt, therefore no taxes need be considered.

a. What is the net present value of the project if the appropriate discount rate is 20 percent?

b. What is the net present value of the project if the appropriate discount rate is 12 percent?

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Year Net Cash Flow 1... ... $10,000 2.... 25,000 3... 40,000 4... 40,000 5.... 50,000