The manager of a corporate office building wishes to hire a window washing company to wash the outside of the many windows on the office building. The manager would like to form a long-term contract with the window washing company, so they can determine future prices and terms for the window washing services over the next several years. The manager spoke with two window washing companies, Washing High and Smooth Smoothers, and asked them each to submit a bid of what they would charge for window washing services over the next 4 years. There are no incremental revenues attached to the hiring of the window washing companies, so the manager will choose the company solely on the basis of the present value of costs. The manager uses a corporate cost of capital of 10% to evaluate average risk projects. Here are the net cash flow estimates provided by each company to the manager: Year 0 1 2 3 Washing High ($1,400) ($1,484) ($1,573) ($1,667) Smooth Smoothers ($1,480) ($1,510) ($1,540) ($1,571) a) Based on the cash flows in the table above and a current interest rate of 10% for average-risk projects, the Net Present Value (NPV) of Washing High is -$5,302 and the NPV of Smooth Smoothers is -$5,306. Which window washing service should the manager choose? b) While researching the window washing companies, the manager learns that Washing High has a lot of turnover in their employees, and has trouble keeping the same employees at the company for very long. The manager also determines that most employees at Smooth Smoothers have been working there for at least 3 years. i. Which company should the manager consider to be more risky? should the ider to be more risky ii. The manager accounts for differential risk by adjusting its corporate cost of capital up or down by 2 percentage points. For the company you selected as more risky above, now what is the appropriate interest rate to use to find the NPV? % iii. For the company you selected as more risky, what is the net present value of their services, using the risk-adjusted interest rate? iv. Now, which company should the manager choose for their window washing services? 3. To determine whether a capital investment is a good idea, a business will compute the net present value (NPV), and if the resulting NPV is investment. a) less than $0 b) greater than or equal to $0 c) positive and large enough to cover this initial start up costs they will make the