Sponge Pants and Square Bob is considering building a water slide park that will require a net investment of $200,000 and yield the following net cash flows: Year Net Cash Flows Cert. Equiv. Factor . 90 .80 .65 .50 . 30 $120,000 2 3 90,000 60,000 30,000 10,000 If the risk-free rate is 8 percent and the market risk premium is 6 percent, what is the certainty equivalent NPV for this project? Assume that the company's cost of capital is 18% $ 3,703 $ 5,746 $12,805 $11,025 Question 7 (3 points) Hydroplane is considering adding another bluehouse that would cost $95,000 and generate $20,000 in annual net cash flows over it's 8 year expected life. The bluehouse would be depreciated on a straight-line basis to zero and the salvage value is also expected to be zero. If the firm has a marginal tax rate of 40 percent, what is this project's internal rate of return? between 28 and 32% between 20 and 24% between 13 and 14% between 7 and 8%