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   Net Present Value Method and Internal Rate of Return Method for a Service Company

   Wellington Healthcare Corp. is proposing to spend $471,960 on an 8-year project that has estimated net cash flows of $76,000 for each of the 8 years.

   Present Value of an Annuity of $1 at Compound Interest
   Year	6%	10%	12%	15%	20%
   1	0.943	0.909	0.893	0.870	0.833
   2	1.833	1.736	1.690	1.626	1.528
   3	2.673	2.487	2.402	2.283	2.106
   4	3.465	3.170	3.037	2.855	2.589
   5	4.212	3.791	3.605	3.353	2.991
   6	4.917	4.355	4.111	3.785	3.326
   7	5.582	4.868	4.564	4.160	3.605
   8	6.210	5.335	4.968	4.487	3.837
   9	6.802	5.759	5.328	4.772	4.031
   10	7.360	6.145	5.650	5.019	4.192

   a. Compute the net present value, using a rate of return of 10%. Use the table of present value of an annuity of $1 presented above. If required, round your answers to the nearest dollar. If required, use the minus sign to indicate a negative net present value.

   Present value of annual net cash flows	$fill in the blank 1
   Less amount to be invested	$fill in the blank 2
   Net present value	$fill in the blank 3

   b. Based on the analysis prepared in part (a), is the rate of return (1) more than 10%, (2) 10%, or (3) less than 10%?

   More than 10%Less than 10%Equal to 10%

   c. Determine the internal rate of return by computing a present value factor for an annuity of $1 and using the table of the present value of an annuity of $1 presented above. fill in the blank 5%