technology-based consumer products both in their stores and over the internet, with sales split roughly equally between the two channels of distribution. The company's products range from radar detection devices and GPS mapping systems used in automobiles to home-based weather monitoring stations. The company recently began investigating the possible acquisition of a regional warehousing facility that could be used both to stock its retail shops and to make direct shipments to the firm's on-line customers. The warehouse facility would require an expenditure of $250,000 for a rented space in Oklahoma City, Oklahoma, and would provide a source of cash flow spanning the next 10 years. The estimated cash flows are as follows: The negative cash flow in year 5 reflects the cost of a planned renovation and expansion of the facility. Finally, in year 10 Garmen estimates some recovery of its investment at the close of the lease and consequently a higher-than-usual cash flow. Garmen uses a discount rate of 12.0 percent in evaluating its investments. a. As a preliminary step in analyzing the new investment, Garmen's management has decided to evaluate the project's anticipated payback period. What is the project's expected payback period? Jim Garmen, CEO, questioned the analyst performing the analysis about the meaning of the payback period because it seems to ignore the fact that the project will provide cash flows over many years beyond the end of the payback period. Specifically, he wanted to know what useful information the payback provides. If you were the analyst, how would you respond to Mr. Garmen? Data table (Click on the icon in order to copy its contents into a spreadsheet.) a. Given the cash flow information in the table, the payback period of the project is years. (Round to two decimal places.) The payback method tells you: (Select the best choice below.) A. how much value you are adding or taking from the firm. B. how long it takes you to recover your outflows of cash. C. what the rate of return is for the investment. D. all of the above. b. The project's IRR is \%. (Round to two decimal places.) b. The project's IRR is \%. (Round to two decimal places.) Given the following NPV profile for discount rates of 0%,20%,50%, and 100%, does there appear to be a problem of multiple IRRs in this range of discount rates? (Select from the drop-down menu.) Discount rates (\%) c. The project's NPV is $. (Round to the nearest dollar.) A positive NPV implies: (Select the best choice below.) A. nothing about the value of the company. B. value is added to the company if the project is undertaken. C. value is subtracted from the company if the project is undertaken. D. there is no change in value to the company if the project is undertaken