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(Steps Shown) a) Calculate the NPV of the following investment whose cost is $63,000. Use an RRR of 15%. Should the investment be accepted? Why? Year Cash

Question: a) Calculate the NPV of the following investment whose cost is $63,000. Use an RRR of 15%. Should the investment be accepted? Why?

Year Cash Flow

1 $ 18,900

2 25,250

3 20,640

4 28,790

b) Without doing any calculations, discuss the relationship between the NPV in (a) and the investment’s IRR.

c) Draw the NPV Profile for the investment based on your answers to (a) and (b). (Show both the Y-intercept and the X-intercept for the investment as well as the NPV when K = 15%.) At what discount rates will the project be acceptable?

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