$10-9.$ The Bedford Falls Bridge Building Company is considering the purchase of a new

crane. George Bailey, the new manager, has had some past management experience

while he was the chief financial officer of the local savings and loan. The cost of

the crane is $$17,291\mathrm{.}42,$ and the expected incremental cash flows are $$5,000$ at the

end of year $1,$$$8,000$ at the end of year $2,$ and $$10,000$ at the end of year $3.$

a$.$ Calculate the net present value if the required rate of return is $9$ percent.

b$.$ Calculate the internal rate of return.

c$.$ Should Mr$.$ Bailey purchase this crane?

$10-4.$ You have just paid $$20$ million in the secondary market for the winning Powerball

lottery ticket. The prize is $$2$ million at the end of each year for the next $25$ years.

If your required rate of return is $8$ percent, what is the net present value $($NPV$)$ of

the deal?