Should carla vista go ahead with the project

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Problem 1: Carla Vista, Inc., a resort management company, is refurbishing one of its hotels at a cost of $8,226,621. Management expects that this will lead to additional cash flows of $1,890,000 for the next six years. What is the IRR of this project? If the appropriate cost of capital is 12 percent, should Carla Vista go ahead with this project? (Round answer to 2 decimal places, e.g. 5.25%.)

Problem 2: Blossom Corp. management is investigating two computer systems. The Alpha 8300 costs $2,448,125 and will generate cost savings of $1,253,325 in each of the next five years. The Beta 2100 system costs $3,387,500 and will produce cost savings of $921,750 in the first three years and then $2 million for the next two years. The company's discount rate for similar projects is 14 percent. What is the NPV of each system?

Reference no: EM132917465

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