Stevens and Associates has been offered a 4-year contract to supply the IT requirements for a Payday Loan company. The following cash flow information is provided: Cost of computer equipment Working capital required immediately Upgrading of equipment in 2 years Salvage value of equipment in 4 years Annual net cash inflow $250,000 20,000 90,000 10,000 120,000 Other information: The working capital would be released at the end of the contract Stevens and Associates requires a 7% retum 1. Required: Compute the Net Present Value of this contract on the next page. Show all calculations and/or calculator keystrokes. (9 marks) 2. Required: Should Stevens and Associates accept this contract.? Why or why not? (3 marks) B. MORE STRATEGIC INVESTMENT DECISIONS (6 MARKS) 1. Northern Corporation bought a new machine which cost $87,500, has a useful life of 10 years, and will generate annual cash inflows of $25,000. The residual value of the machine is $5,500 Required: What is the payback period? (2 marks) 2. Western Company can purchase a new machine at a cost of $110,759 that will save $17,000 per year in cash operating costs. The machine has a 9-year useful life