Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $5.21 million per year. Your upfront setup costs to be ready to produce the part would be $8.19 million. Your discount rate for this contract is 7.7%.

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Part 1

a. What does the NPV rule say you should do?

The NPV of the project is ____ million.(Round to two decimal places.)

Part 2

What should you do?(Select the best choice below.)

A.The NPV rule says that you should accept the contract because the NPV>0.

B.The NPV rule says that you should accept the contract because the NPV<0.

C.The NPV rule says that you should not accept the contract because the NPV<0.

D.The NPV rule says that you should not accept the contract because the NPV>0.

Part 3

b. If you take the contract, what will be the change in the value of your firm?

If you take the contract, the value added to the firm will be $_____ million.(Round to two decimal places.)