6) A new computer system will require an initial outlay of $19,000, but it will increase the firm's cash flows by $3,800 a year for each of the next 8 years.

-Calculate the NPV and decide if the system is worth installing if the required rate of return is9%.(Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)

-Calculate the NPV and decide if the system is worth installing if the required rate of return is14%.

7) Here are the cash flows for a project under consideration:

C₀C₁C₂$7,230+$5,100+$18,720

a.Calculate the project's net present value for discount rates of 0, 50%, and 100%.

0%

50%

100%

b.What is the IRR of the project?(Do not round intermediate calculations. Enter your answer as a whole percent.)

8) If you insulate your office for $27,000, you will save $2,700 a year in heating expenses. These savings will last forever.

a.What is the NPV of the investment when the cost of capital is 6%? 10%?

6%

10%

b.What is the IRR of the investment?(Enter your answer as a whole percent.)

What is the payback period on this investment?

9)

Here are the expected cash flows for three projects:

Project Year 0 1 2 3 4

A -6900 +1475 +1475 +3950 0

B -2900 0 +2900 +2950 +3950

C -6900 +1475 +1475 +3950 +5950

.What is the payback period on each of the projects?

a

b

c

If you use a cutoff period of 2 years, which projects would you accept?

• Project A
• Project B
• Project C
• Project A and Project B
• Project B and Project C
• Project A and Project C
• Projects A, B, and C
• None

c.If you use a cutoff period of 3 years, which projects would you accept?

• Project A
• Project B
• Project C
• Project A and Project B
• Project B and Project C
• Project A and Project C
• Projects A, B, and C
• None

1.If the opportunity cost of capital is 12%, calculate the NPV for projects A, B, and C.(Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)

-2.Which projects have positive NPVs?

• Project A
• Project B
• Project C
• Project A and Project B
• Project B and Project C
• Project A and Project C
• Projects A, B, and C
• None