NPV; Sensitivity Analysis Griffey & Son operates a plant in Cincinnati and is considering opening a new facility in Seattle. The initial outlay will be $3,500,000 and should produce after-tax net cash inflows of $600,000 per year for 15 years. Due to the effects of the ocean air in Seattle, however, the plants useful life may be only 12 years. Cost of capital is 14%.

Required

Based on an NPV analysis, should the project be accepted if a 15-year useful life is assumed? What if a 12-year useful life is used?

How many years will be needed for the Seattle facility to earn at least a 14% return?