Question 2: Evaluating investment projects You are planning to invest $35,000 in research & development (R&D). This investment will generate cost savings of $24,500 in year 1 and $17,500 in year 2. After 2 years, the salvage value is zero. The cost of capital is 25% a year. a) Compute the net present value. NPV = $

b) Following a government stimulus program, the cost of capital decreased to 10% a year. Compute the net present value at the new cost of capital. NPV = $