A new computer system will require an initial outlay of $16,000, but it will increase the firms cash flows by $3,200 a year for each of the next 8 years a Calculate the NPV and decide if the system is worth installing if the required rate of return is 9 What if it is 14 b How high can the discount rate be before you would reject the project

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Question: A new computer system will require an initial outlay of $16,000, but it will increase the firms cash flows by $3,200 a year for each

A new computer system will require an initial outlay of $16,000, but it will increase the firms cash flows by $3,200 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 is 9%. What if it is 14%?

b. How high can the discount rate be before you would reject the project?

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