Merrill Corp. has the following information available about a potential capital investment:

Initial investment $ 2,400,000

Annual net income $ 170,000

Expected life 8 years

Salvage value $ 180,000

Merrill's cost of capital 8 %

Assume straight line depreciation method is used.

Required:

1. Calculate the project's net present value.

2. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 8 percent.

3. Calculate the net present value using a 10 percent discount rate.

4. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 10 percent.