1. An investment opportunity costing $60,000 offers the following estimated after-tax cash inflows over the next seven years: $10,000 , $15,000 , $15,000, $20,000, $15,000, $10,000, and $5,000.

a. Calculate the net present value (NPV) of these flows at 10% and at 16%. What is the internal rate of return (IRR)?

b. How would your results in Part a) change if there was a capital recovery or terminal value of $10,000 after-tax in addition to the year 7 cash inflow? (Calculate NPV at 10% and 16%, as well as the IRR.)

CF7= 5,000 + 10,000 = 15,000; Other CFs are the same as before.