NPV / IRR homework question

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1.  Jackson Company is considering the investment in a computer system.  The company estimates that it will require an initial outlay of $1,200,000.  Other cash flows will be as follows:

Year 1

($600,000)

Year 2

150,000

Year 3

620,000

Year 4

725,000

Year 5

800,000

Required:

Assuming the company limits its analysis to five years, should the company consider this investment? Calculate the net present value of this project with a required rate of return of seven percent. Also, does your answer change if the required rate of return is 12 percent?

 
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