Your RRR is 10%. Your company is considering buying a $100,000 crane that will produce the following cash flows:

Year 1 - $10,000
Year 2 - $15,000
Year 3 - $18,000
Year 4 - $20,000
Year 5 - $15,000
Year 6 - $12,000
Year 7 - $10,000

1. What is this projects NPV?

2. Do you buy it or not and why?

Carlton industries is considering a new project that they plan to price at $74.00 per unit. the variable costs are estimated at $39.22 per unit and total fixed costs are estimated at $12,085. the initial investment required is $8,000 and the project has an estimated life of 4 years. the firm requires a return of 8 percent. ignore the effect of taxes. what is the degree of operating leverage at the financial break-even level of output?