File Dufver2/ADMN2556/2556-1%20TEXT%20BOOK.pdf Dw- Q Search 1 Read aloud Ask Bing Al 2556-E TEXT BOC pdf + 547 X of 642 B 916 13. Pedro's Plumbing uses an interest rate of 20% to evaluate new invest- ment projects. The company is considering a new in-store security system for its Carlton Place branch. The system is budgeted to cost $654,900. The cost will be depreciated over its expected useful life of five years. The new system should increase cash flows by reducing stock shrinkage by $200,000 per year for five years. Because the project is considered to be low risk, it has been suggested that it be evaluated using an interest rate of 14%, not 20%. Required (a) Calculate the net present value at the normal rate of 20%. (b) Calculate the net present value at the low risk rate of 14%. What would happen if the project were to be evaluated at a rate of 16%? (c) ENG US 252 4 2023-11