A project that costs $2,000 to install will provide annual cash flows of $550 for the next 5 years. The firm accepts projects with payback periods of less than 3 years.

a-1.	What is the payback period of the project? (Round your answer to 2 decimal places.)

Payback period

years

a-2.	Will the project be accepted?
	No Yes

b-1.	What is project NPV if the discount rate is 2%? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

NPV

$

b-2.	Should this project be pursued?
	Yes No

c-1.	What is project NPV if the discount rate is 12%? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

NPV

$

c-2.	Should this project be pursued?
	Yes No

d.	Will the firms decision change as the discount rate changes?
	No Yes