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he expects demand to stabilize. The following table presents the expected cash flows: Year of Operation Cash Inflow Cash Outflow Year 1 $13 , 200 $ 9, 400 Year 2 18, 700 11, 100 Year 3 22, 700 13, 200 Year 4 22, 700 13, 200 In addition to these cash flows, Aaron expects to pay $21,200 for the equipment. He also expects to pay $3,000 for a major overhaul and updating of the equipment at the end of the second year of operation. The equipment is expected to have a $1,700 salvage value and a four year useful life. Aaron desires to earn a rate of return of 9 percent. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Required a. Calculate the net present value of the investment opportunity. (Negative amount should be indicated by a minus sign. Round intermediate calculations and final answer to 2 decimal places.) b. Indicate whether the investment opportunity is expected to earn a return that is above or below the desired rate of return and whether it should be accepted. a Net present value Will the return be above or below the cost of capital? Above Should the investment opportunity be accepted? Accepted