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A new computer system will require an initial outlay of $15,000, but it will increase the firm's cash flows by $3,000 a year for each of the next 6 years.
a. Calculate the NPV and decide if the system is worth installing if the required rate of return is 8%. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)
NPV ?
WORTH INSTALLING ?
b. Calculate the NPV and decide if the system is worth installing if the required rate of return is 13%. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)
c. How high can the discount rate be before you would reject the project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
MAXIMUM DISCOUNT RATE ?%
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