8) Mansong, Inc., is considering the purchase of a patent that has a cost of $85,000 and an estimated revenue producing life of 4 years. The company has a required rate of return that is 12% and a cost of capital of 11%. The patent is expected to generate the following amounts of annual income and cash flows: Year 1 Year 2 Year 3 Total Net income $ 6,900 $9,600 $3,000 $ 6,300 Operating cash flows 19,500 18,700 20,250 15,900 A. What is the NPV of the investment? B. What happens if the required rate of return increases? Solution A. Cash Flows Factor NPV Initial investment NPV B. If the required rate of return increases, the NPV will be