Question: What is the effect caused by changing the discount rate to 9 , 1 0 , or 1 1 percent? 1 1 . Perot Corporation

What is the effect caused by changing the discount rate to 9,10, or 11 percent?
11. Perot Corporation is developing a new CPU chip based on a new type of technology. Its
new chip, the Patay2 chip, will take two years to develop. However, because other chip
manufacturers will be able to copy the technology, it will have a market life of two years
after it is introduced. Perot expects to be able to price the chip higher in the first year, and
it anticipates a significant production cost reduction after the first year as well.

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