Merrill Corporation has the following information available about a potential capital investment: Initial investment $ 1,000,000 Annual net income $ 100,000 Expected life 8 years Salvage value $ 110,000 Merrills cost of capital 7 Assume straight line depreciation method is used.

Calculate the projects net present value. (Future Value of $1,Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 7 percent.

Calculate the net present value using a 14 percent discount rate. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 14 percent.