Question: A new computer system will require an initial outlay of $15,650, but it will increase the firm's cash flows by $3,400 a year for

A new computer system will require an initial outlay of $15,650, but it will increase the firm's cash flows by $3,400 a year for each of the next 7 years. a. Calculate the NPV and decide if the system is worth installing if the required rate of return is 10% Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. Net present value Worth installing $ Yes Net present value 902.08 b. Calculate the NPV and decide if the system is worth installing if the required rate of return is 15% Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. 1,504.50 b. Calculate the NPV and decide if the system is worth installing if the required rate of return is 15%. Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. Net present value Worth installing $ No Maximum discount rate 1,504.50 c. How high can the discount rate be before you would reject the project? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. 15.00 %
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a The NPV calculation formula iswhen the rate of return is 10 NPV is calculated as follows CF1 1 r1 CF2 1 r2 CFn 1 rn Initial Outlay Where Cash Flow C... View full answer
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