Now, it is time to make a decision concerning the Miami Publishing capital budgeting project. Assume that the calculations up to this point are the following:

initial cash flow = - $125,000

operating cash flows = $75,000; $50,000; $10,000

terminal cash flow = $10,000.

weighted average cost of capital (WACC) = 8.5%

Using this information, answer the following questions:

1. What is the net present value (NPV) of the project?

2. What is the internal rate of return (IRR) of the project?

3. Based on the net present value (NPV), should the project be accepted? Why or why not?

4. Based on the internal rate of return (IRR), should the project be accepted? Why or why not?

5. What is the project's expected rate of return? What is its required rate of return?