Star City is considering an investment in the community center that is expected to return the following cash flows: Use Exhibit A.8.

Year Net Cash Flow 1 $ 35,000 2 65,000 3 95,000 4 95,000 5 115,000

This schedule includes all cash inflows from the project, which will also require an immediate $215,000 cash outlay. The city is tax-exempt; therefore, taxes need not be considered.

Required:

a. What is the net present value of the project if the appropriate discount rate is 25 percent? (Round PV factor to 3 decimal places. Negative amount should be indicated by a minus sign.)

b. What is the net present value of the project if the appropriate discount rate is 15 percent? (Round PV factor to 3 decimal places. Negative amount should be indicated by a minus sign.)