A new computer system will require an initial outlay of $14,150, but it will increase the firm's cash flows by $3,100 a year for each of the next 7 years. a. Calculate the NPV and decide if the system is worth installing if the required rate of return is 10%. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Net present value Worth install b. Calculate the NPV and decide if the system is worth installing if the required rate of return is 15%. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)
A new computer system will require an initial outlay of $14,150, but it will increase the firm's cash flows by $3,100 a year for each of the next 7 years. a. Calculate the NPV and decide if the system is worth installing if the required rate of return is 10%. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Net present value Worth install b. Calculate the NPV and decide if the system is worth installing if the required rate of return is 15%. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Also how high can the discount rate be before you would reject the project?
Transcribed Image Text:A new computer system will require an initial outlay of $14,150, but it will increase the firm's cash flows by $3,100 a year for each of the
next 7 years.
a. Calculate the NPV and decide if the system is worth installing if the required rate of return is 10%. (Negative amount should be
indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)
Net present value
Worth install
b. Calculate the NPV and decide if the system is worth installing if the required rate of return is 15%. (Negative amount should be
indicated bya minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)
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