EXERCISE 7: CALCULATING THE NPV AND THE IRR Aaron Manufacturing Inc. intends to invest $70,000 in a modernization capital project that will generate the following cash inflows during eight years: Year $12,000 17,000 18,000 1 2 3 4 5 6 7 8 23,000 DERE 15,000 11,000 9,000 8,000 Questions 1. Calculate the NPV at 12% and 18%. 2. Calculate the internal rate of return of the capital project. 3. If the annual cash flow were an even $15,000 per year for eight years, what would be the NPV at 12% and 18%? 4. What level of annual cash flow would be required to obtain a 20% IRR? 5. How would the results of (1) and (2) change if there was a capital recovery of $40,000 at the end of year 8