1. OptiLux is considering investing in an automated manufacturing system. The system requires an initial investment of $4 million, has a 20-year life, and will have zero salvage value. If the system is implemented, the company will save $500,000 per year in direct labor costs. The company requires a 10% return from its investments. a. Compute the proposed investments net present value. b. Using your answer from part 1, is the investments internal rate of return higher or lower than 10%?

2. Following is information on two alternative investments being considered by Jolee Company. The company requires a 10% return from its investments.

	Project A					Project B
Initial investment		$	(160,000	)			$	(105,000	)
Expected net cash flows in:
Year 1			40,000					32,000
Year 2			56,000					50,000
Year 3			80,295					66,000
Year 4			90,400					72,000
Year 5			65,000					24,000

Compute the internal rate of return for each of the projects using excel functions. (Round your answers to 2 decimal places.)