A new computer system will require an initial outlay of $20,000, but it will increase the firm's

Question:

A new computer system will require an initial outlay of $20,000, but it will increase the firm's cash flows by $4,000 a year for each of the next 8 years. Is the system worth installing if the required rate of return is 9%? What if it is 14%? How high can the discount rate be before you would reject the project?

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...