# 9041306 - X Instructions Holland Inc has just completed...

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of the new product's life cycle. Annual cash operating expenses are estimated at \$81 1 Prepare a schedule of the projected annual cash flows Year Item Cash flow 0 Equipment (1,440,000) Working Capital (180,000) Total (1,620,000) 1 to 4 Revenues 1,350,000 Less Operating expenses (810,000) Total 540,000 5 Revenues 1,350,000 Less Operating expenses (810,000) Salvage value 180,000 Recovery of Working Capital 180,000 Total 900,000 2 Calculate the NPV using only discount factors from the Present Value of a year Cash flow Discount factor Present Value 0 (1,620,000) 1 (1,620,000) 1 540,000 0.92593 500,002 2 540,000 0.85734 462,964 3 540,000 0.79383 428,668 4 540,000 0.73503 396,916 5 900,000 0.68058 612,522 Net Prsent value 781,072 3 Calculate the NPV using discount factors from both of the tables shown in year Cash flow

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