Network Service Center is considering purchasing a new computer network for $82,000. It will require additional working capital of $13,000. Its anticipated eight-year life will generate additional client revenue of $33,000 annually with operating costs, excluding depreciation, of $15,000. At the end of eight years, it will have a salvage value of $9,500 and return $5,000 in working capital. Taxes are not considered.

How do you do this question in Excel?

Required:

a. If the company has a required rate of return of 14%, what is the net present value of the proposed investment?

b. What is the internal rate of return?