1. Canada Widgets is looking at a $400 000 digital midget rigid widget gadget (CCA class 8). It is expected to save $85 000 per year over its 10-year life, with no scrap value. Their tax rate is 45%, and their after-tax MARR is 15%. Calculate the IRR using the exact and the approximate methods. Should they invest in this gadget?
2. The managers of Merton Medical Clinic are analyzing a proposed project. The project's most likely NPV is $120,000, but, as evidenced by the following NPV distribution, there is considerable risk involved: Probability NPV 0.05 -$700,000 0.2 -$250,000 0.5 $120,000 0.2 $200,000 0.05 $300,000 a. What are the project's expected NPV and standard deviation of NPV?