You are in the printing business and your major competitor recently purchased a high speed color laser copier. You currently do not offer color copies, so you are considering a similar purchase. You estimate the following incremental cash flows if you buy the color laser copier. Initial cost of copier: $23,000; an additional 9,000 copies per year with a net after-tax cash inflow of $0.65 per copy; five-year life of copier with no salvage value; and the project's cost of capital is equal to 11 percent. Based on an analysis of these cash flows, which of the following statements is/are true? A). The payback period for this project is 3.1 years. B) The copier should not be purchased since the net present value is negative $1,379. C) The internal rate of return is only 1 percent lower than the required return, indicating a gray area in the decision process. D) The copier should be purchased since the net present value is $3,500. Crandal Dockworks is undergoing a major expansion. The expansion will be financed by issuing new 15-year, $1,000 par, 9% annual coupon bonds. The market price of the bonds is $1,070 each. Crandal's flotation expense on the new bonds will be $50 per bond. Crandal's marginal tax rate is 35%. What is the company's cost for the newly- issued bonds? A) 5.69% B) 7.99% C) 8.76%. D) 9.82% A significant advantage of the payback period is that it A) places emphasis on time value of money. B) allows for the proper ranking of projects. cashflows. reduce firm risk because it favors projects that generate early, less uncertain D) gives proper weighting to all cash flows