Question
A new computer system will require an initial outlay of $16,500, but it will increase the firms cash flows by $3,300 a year for each
A new computer system will require an initial outlay of $16,500, but it will increase the firms cash flows by $3,300 a year for each of the next 6 years.
Calculate the NPV and decide if the system is worth installing if the required rate of return is 8%. What if it is 13%? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)
A)
Rate of Return | NPV | Worth Installing |
8% | $ | Yes or No |
13% | $ | Yes or No |
B) How high can the discount rate be before you would reject the project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
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