expected to cost $$96,000$ per year in perpetuity. Assume all profits and expenses occur at the end of the year.

a$.$ What is the NPV of this investment if the cost of capital is $5\mathrm{.}6\%?$ Should the firm undertake the project? Repeat the analysis for discount rates of $1\mathrm{.}6\%$ and $14\mathrm{.}1\%,$ respectively.

b$.$ What is the IRR of this investment opportunity?

c$.$ What does the IRR rule indicate about this investment?

a$.$ What is the NPV of this investment if the cost of capital is $5\mathrm{.}6\%?$ Should the firm undertake the project? Repeat the analysis for discount rates of $1\mathrm{.}6\%$ and $14\mathrm{.}1\%,$ respectively.

If the cost of capital is $5\mathrm{.}6\%,$ the NPV will be $$($Round to the nearest dollar.$)$

Should the firm undertake the project? $($Select the best choice below.$)$

A$.$ No$,$ because the NPV is not greater than the initial costs

B$.$ No$,$ because the NPV is less than zero

C$.$ Yes, because the NPV is equal to or greater than zero

D$.$ There is not enough information to answer this question.

When $r=1\mathrm{.}6\%,$ the NPV will be $$,($Round to the nearest dollar.$)$

When $r=14\mathrm{.}1\%,$ the NPV will be $$.($Round to the nearest dollar.$)$

b$.$ What is the IRR of this investment opportunity? $($Select all the choices that apply.$)$

A$.$ There is at least one IRR between $5\mathrm{.}6\%$ and $14\mathrm{.}1\%.$

B$.$ There is at least one IRR between $1\mathrm{.}6\%$ and $5\mathrm{.}6\%.$

C$.$ From the answer to a$,$ there are at least two IRRs.

D$.$ There is only one IRR between $1\mathrm{.}6\%$ and $14\mathrm{.}1\%.$

c$.$ What does the IRR rule indicate about this investment? $($Select the best choice below.$)$

A$.$ The IRR rule says nothing in this case because there are two IRRs.

B$.$ Since at least one of the IRRs is lower than the discount rate, the IRR rule says to not take the project.

C$.$ In this case, the IRR rule says you can either take or not take the project.

D$.$ Since at least one of the IRRs is higher than the discount rate, the IRR rule says to take the project.