Question
A new computer system will require an initial outlay of $24,000, but it will increase the firms cash flows by $4,800 a year for each
A new computer system will require an initial outlay of $24,000, but it will increase the firms cash flows by $4,800 a year for each of the next 6 years. |
a. | Calculatethe NPV and find out if the system worth installing if the required rate of return is8%? What if it is13%?(Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) |
Rate of Return | NPV | Worth Installing |
8% | $ | (Click to select)NoYes |
13% | (Click to select)YesNo |
b. | How high can the discount rate be before you would reject the project?(Do not round intermediate calculations. Round your answer to 2 decimal places.) |
Maximum discount rate | % |
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