1. A firm wishes to bid on a contract that is expected to yield the following after-tax net cash flows at the end of each year.

Year Net Cash Flow

1 $ 5,000

2 8,000

3 9,000

4 8,000

5 8,250

6 5,400

7 3,100

8 $-1,200

The initial investment (Investment at time 0) is $30,000. Compute:

a. The net present value if the discount rate is 12 percent.

b. Compute the undiscounted payback period.