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A new IS project has been proposed that is expected to produce not only cost savings but also an increase in revenue. The initial capital costs to establish the system is estimated to be $500,000 The remaining cash flow data is presented in Table 2.10.
A. Using a spreadsheet program, calculate the payback period, internal rate of return, and net present value for the project. Assume that the cost of capital is 7 percent.
B. How would the payback, internal rate of return, and net present value change if the capital cost for the project was $750,000 and the savings and increased revenue were decreased by 25 percent each.