1. Cristina Company is considering investing in a new electronic data interchange (EDI) integrated system. The expected data follow. The cost savings are already after taxes, so taxes can be ignored. Acquisition cost $450,000 Useful life 8 years Additional major improvement in 3 years $36,000 Salvage value at end of 8 years $84,000 Years 1, 2, 3, 4 $130,000 Annual cost savings Years 5, 6, 7, 8 $150,000 Salary of janitor per year whether the company buys the system or not $22,000 Management estimates of the old, fully depreciated system if sold today $12,000 Cost of capital is 12%. a. Set up the schedule of relevant cash flows below. Label clearly the relevant items. Calculate the net present value in the last column. Year Now Year 11 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Label Relevant Items b. Calculate the payback period. Annual Cash Flows PV Factor Present Value