Question: A new computer system will require an initial outlay of $15,000 but it will increase the firm's cash flows by $4,000 a year for each

A new computer system will require an initial outlay of $15,000

A new computer system will require an initial outlay of $15,000 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: A. the uses a rule of thumb that it should recover its costs of investments in 4 years? Does this thumb rule incorporate discounting futrure cash flows from this new investment? B. If the reuired rate of return is 8 percent is the project worth considering? C. How high can the discount rate be before you would reject the project? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac)

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