A new computer system will require an initial outlay of $15,500, but it will increase the firms cash flows by $3,100 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 What if it is 15 (Negative amounts should be indicated by a minus sign Do not round intermediate calculations Round your answers to 2 decimal places ) Rate of Return NPV Worth Installing 10 $ (Click to select)YesNo 15 $ (Click to select)YesNo b How high can the discount rate be before you would reject the project (Do not round intermediate calculations Enter your answer as a percent rounded to 2 decimal places ) Maximum discount rate

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Question: A new computer system will require an initial outlay of $15,500, but it will increase the firms cash flows by $3,100 a year for each

A new computer system will require an initial outlay of $15,500, but it will increase the firms cash flows by $3,100 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%. What if it is 15%? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)

Rate of Return		NPV	Worth Installing
10%	$		(Click to select)YesNo
15%	$		(Click to select)YesNo

b.	How high can the discount rate be before you would reject the project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Maximum discount rate

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