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Paper Towels (Do Nothing) Number of dispensing units 725 Year 1 2 3 4 5 6 Operating Cash Flow ($s/unit) ($875.00) ($905.63) ($937.32) ($979.50) ($1,038.27)

Paper Towels (Do Nothing) Number of dispensing units 725 Year 1 2 3 4 5 6 Operating Cash Flow ($s/unit) ($875.00) ($905.63) ($937.32) ($979.50) ($1,038.27) ($1,110.95) Brand X Hand Dryers Number of Units 725 Purchase Price ($s/unit) $4,450.00 Year 1 2 3 4 5 6 Operating Cash Flow ($s/unit) ($275.00) ($280.50) ($288.92) ($300.47) ($318.50) ($340.79) Brand Y Hand Dryers (Faster, more efficient than Brand X, fewer units required) Number of Units 675 Purchase Price ($s/unit) $7,650.00 Year 1 2 3 4 5 6 Operating Cash Flow ($s/unit) ($125.00) ($126.56) ($128.46) ($131.67) ($134.96) ($138.34) Rutgers' CFO believes that Brand X should be evaluated using a 10% per year required rate of return and Brand Y using a 15% per year required rate of return (i) What risk factors might have lead to the CFO's conclusion regarding required rate of return for Brand X

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