Response to the following problem:
Wisconsin Healthcare Corp. is proposing to spend $3,810,000 on a project that has estimated net cash flows of $620,000 for each of the 10 years.
a. Compute the net present value, using a rate of return of 12%. Use the table of present values of an annuity of $1 .
b. Based on the analysis prepared in part (a), is the rate of return (1) more than 12%, (2) 12%, or (3) less than 12%? Explain.
c. Determine the internal rate of return by computing a present value factor for an annuity of $1 and using the table of the present value of an annuity of $1 .