NPV and IRR

Each of the following scenarios is independent. All cash flows are after$-$tax cash flows.

The present value tables provided in Exhibit $19$B$\mathrm{.}1$ and Exhibit $19$B$\mathrm{.}2$ must be used to solve the following problems.

Required:

$1.$ Patz Corporation is considering the purchase of a computer$-$aided manufacturing system. The cash benefits will be $$805,000$ per year. The system costs $$5,856,000$ and will last twelve years. Compute the NPV assuming a discount rate of $8$ percent.

$fill in the blank $1$

Should the company buy the new system?

$2.$ Sterling Wetzel has just invested $$376,500$ in a restaurant specializing in German food. He expects to receive $$65,512$ per year for the next eight years. His cost of capital is $7\mathrm{.}50$ percent. Compute the internal rate of return. Round your answers to whole percentage value $($for example, $16\%$ should be entered as $"16"$ in the answer box$).$

fill in the blank $3$

$\%$

Did Sterling make a good decision?