1. A piece of new equipment will cost $70,000. The equipment will provide a cost savings of $15,000 per year for ten years, after which it will have a $3,000 salvage value. If the required rate of return is 14%, the equipment's net present value is: (Ignore income taxes.)
a $8,240
b $23,888
c $(8,240)
d $9,050
2. If the internal rate of return is used as the discount rate in computing net present value, the net present value will be:
a zero.
b negative.
c unknown.
d positive.
3. The internal rate of return for a project is the discount rate that makes the net present value of the project equal to zero: True or False