Computing net present value. Gators, Inc., is considering a project that requires an initial investment of $2,000,000 and that will generate the following cash inflows for the next five years:

Year Cash Inflow at End of Year 1 ................................................................................................... $300,000 2 ...................................................................................................... 400,000 3 ...................................................................................................... 800,000 4 ...................................................................................................... 800,000 5 ....................................................................................................... 600,000

Calculate the net present value of this project if Gators cost of capital is:

a. 12 percent.

b. 20 percent.