please just answer question 16 about Flacco Co.
You are in the printing business and your major competitor recently purchased a high speed color laser copier. You currently do not offer color copies, so you are considering a similar purchase. You estimate the following incremental cash flows if you buy the color laser copier: Initial cost of copier: $23,000; an additional 9,000 copies per year with a net after-tax cash inflow of $0.65 per copy; five-year life of copier with no salvage value; and the project's cost of capital is equal to 11 percent. Based on an analysis of these cash flows, which of the following statements is/are true? A). The payback period for this project is 3.1 years. B) The copier should not be purchased since the net present value is negative $1,379. C) The internal rate of return is only 1 percent lower than the required return, indicating a gray area in the decision process. D) The copier should be purchased since the net present value is $3,500. 6. Crandal Dockworks is undergoing a major expansion. The expansion will be financed by issuing new 15-year, $1,000 par, 9% annual coupon bonds. The market price of the bonds is $1,070 each. Crandal's flotation expense on the new bonds will be $50 per bond. Crandal's marginal tax rate is 35%. What is the company's cost for the newly- issued bonds? A) 5.69%. B) 7.99%. C) 8.76%. D) 9.82%. 7. A significant advantage of the payback period is that it A) places emphasis on time value of money. B) allows for the proper ranking of projects. C) tends to reduce firm risk because it favors projects that generate early, less uncertain 8. cashflows. D) gives proper weighting to all cash flows. Flacco Co. is considering a new inventory system that will cost $772,051. The system is expected to generate positive cash flows over the next four years in the amounts of $350,000 in year one, $325,000 in year two, $150,000 in year three, and $180.000 in year four. Flacco expects to see the inventory system for $30,000 salvage value at the end of year four. Flacco's required rate of return is 8%. What is the internal rate of return of this project? A) 10.87% B) 11.57% C) 13.68% D) 14.76% 16