1.Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $5.09 million per year. Your upfront setup costs to be ready to produce the part would be $8.11 million. Your discount rate for this contract is 7.9%.

a. What does the NPV rule say you should? do?

b. If you take the? contract, what will be the change in the value of your? firm?

2.Your factory has been offered a contract to produce a part for a new printer. The contract would last for three? years, and your cash flows from the contract would be $5.01 million per year. Your upfront setup costs to be ready to produce the part would be $8.01 million. Your discount rate for this contract is 7.6%.

a. What is the? IRR?

b. The NPV is $5.00 ?million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV? rule?

3.You need a particular piece of equipment for your production process. An? equipment-leasing company has offered to lease the equipment to you for $9,900 per year if you sign a guaranteed 5?-year lease? (the lease is paid at the end of each? year). The company would also maintain the equipment for you as part of the lease.? Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below? (the equipment has an economic life of 5?years). If your discount rate is 6.7%?,what should you? do?

	Year 0 Year 1	Year 2	Year 3	Year 4	Year 5
	?$40,500 -1800	?$1,800	?$1,800	?$1,800	?$1,800