Smith just completed the evaluation of two proposed capital projects for the production department. He reports that using the estimated cost of capital of 15 percent, the robot welder has a net present value of $7,500 and an initial cost of $100,000, whereas the automated spraying equipment has a net present value of $4,800 and a cost of $60,000. Johnson is looking at the figures and asks Smith, ''Does this mean that we are going to earn $7,500 a year from the welder and $4,800 a year from the sprayer? That's only 7.5 and 8 percent return on invest- ment." Explain to Johnson what is wrong with his interpretation and what the figures mean.