1)

After-Tax NPV

Gemini, LLC, invested $1 million in a state-of-the-art information system that promises to reduce processing costs for its purchasing activities by $120,000 per year for the next 10 years. The company will scrap its old information system and will receive no money as a consequence. The new system will be depreciated over 10 years at a rate of $100,000 per year. Gemini's tax rate is 30 percent, and the company has a 7 percent after-tax cost of capital.

What is the after-tax net present value of Gemini's new information system? Use the time value of money charts as needed for your calculations. If required, use a minus sign to indicate a negative net present value. Do not round intermediate amounts. Round your final answer to two decimal places.

2)

Lundquist Inc. has a project that requires an initial investment of $39,000 and has the following expected stream of cash flows:

Year 1	$27,000
Year 2	24,000
Year 3	14,000

Assume that the company's cost of capital is 12 percent. What is the profitability index for the project? Use the time value of money charts for your calculations. Round intermediate dollars to the one decimal place. Round your final answer to one decimal place.