5.

Andi Acquisition, Inc. is considering the purchase of Kristina Covington Company. The acquisition would require an initial investment of $190,000, but Andi?s after-tax net cash flow would increase by $50,000 per year and remain at this new level forever. Assume a cost of capital of 20 percent. Should Andi buy Kristina Company?

	I.	Yes, because the NPV = $60,000
	II.	No, because cost of capital < IRR
	III.	Yes, because the NPV = $50,000
	IV.	Yes, because the IRR < the cost of capital
	V.	None of the above.