Computer system will require an initial outlay

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Reference no: EM131610560

A new computer system will require an initial outlay of $23,500, but it will increase the firm's cash flows by $4,700 a year for each of the next 7 years.

a. Calculate the NPV and decide if the system is worth installing if the required rate of return is 10%. What if it is 15%? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)

Rate of Return NPV Worth Installing 10% $ (Click to select)

Yes

15% $ (Click to select)

Yes

b. 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 % Hints

Reference no: EM131610560

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