11.4 Mason, Inc., is considering the purchase of a patent that has a cost of $85,000 and an estimated revenue producing life of 4 years. Mason has a required rate of return that is 12% and a cost of capital of 11%.

The patent is expected to generate the following amounts of annual income and cash flows:

A. What is the NPV of the investment?

B. What happens if the required rate of return increases?