6 of 9 Donald's hair salon is considering buying airtime for a television commercial to spread the word about their services and get clients during non-peak hours. Alternatively, they could invest in a cheaper newspaper ad campaign. They forecasted the following cash flows for the two options: Television: Investment of $6,750 would increase profits by $5,900 in the 1st year and $4,600 in the 2nd year. Newspaper: Investment of $500 today would increase profits by $1,300 in the 1st year and $800 in the 2nd year. The cost of capital is 19.00%. a. By calculating the Net Present Value (NPV) of each investment, determine which option is better? a. Television O b. Newspaper b. By how much is the profit of the better investment greater than the other investment? Round to the nearest cent Question 7 of 9 Victoria purchased two trucks for his warehouse for a total of $66,000. This investment saved him $15,500 every year for 9 years. At the end of year 9, he sells both the trucks for a total of $14,000. a. What is the Net Present Value (NPV) of the investment if the required rate of return is 6%? Round to the nearest cent b. Does the investment meet the required rate of return? Yes No Question 8 of 9 Kiara was evaluating the feasibility of a project that has an initial investment of $195,000 and subsequent investments of $155,000 in the 1st and 2nd years. From the 3rd year onwards, it will generate cost savings of $230,000 every year for 8 years. a. If the project has a terminal value of $85,000, what is the Internal Rate of Return (IRR)? % Round to two decimal places b. Should the project be accepted if the company's cost of capital is 23.00%? (click to select) Question 9 of 9 Elizabeth purchased a franchise agreement to distribute electronic gadgets for 8 years. The agreement cost $1,700,000 and he had to make investments of $825,000 for the first 2 years to set up his showroom. The franchise generated $1,025,000 in profits each year from the 1st year to 8 years afterwards. At the end of year 8, he sold the furniture in his showroom for $105,000. a. What is the Internal Rate of Return (IRR)? % Round to two decimal places b. Should he have proceeded with this plan if his cost of capital was 11%? (click to select)