Bradley Corporation's required rate of return is 14%. The company has an opportunity to be

the exclusive distributor of a very popular consumer item. No new equipment would be

needed, but the company would have to use one-fourth of the space in a warehouse it owns.

The warehouse cost $200,000 new. The warehouse is currently half-empty and there are no

other plans to use the empty space. In addition, the company would have to invest $100,000

in working capital to carry inventories and accounts receivable for the new product line. The

company would have the distributorship for only 5 years. The distributorship would generate

a $17,000 annual net cash inflow. (Ignore income taxes in this problem.)

Required:

What is the net present value of the project? What is the projects internal rate of return?