8 Suppose we have a company that is considering undertaking a project. The annual cash flows and eauipment salvace values are provided below. WACC=10% How many years should this company keep the project going? The answer is either 1 year, 2 years, 3 years or 4 years. Note \#1: You don't need to consider anything else other than the information provided above. For example, taxes are already factored into these numbers. Note \#2: You might find Chapter 10 Tool Kit Answers tab beginning on row 483. Step 2: Add the PV of the onerating cash flows + salvaqe value to determine in which vear is the NPV maximized. \begin{tabular}{|l|c|c|c|c|c|c|c|} \hline & & NPV & \begin{tabular}{c} Initial \\ Cost \end{tabular} & + & \begin{tabular}{c} PV of \\ Cperating \\ Clows \end{tabular} & + & \begin{tabular}{c} PV of \\ Salvage \\ Value \end{tabular} \\ \hline Operate for 1 Year: & NPV1: & & & & & & \\ \hline Operate for 2 Years: & NPV2: & & & & & & \\ \hline Operate for 3 Years: & NPV3:: & & & & & & \\ \hline Operate for 4 Years: & NPV4: & & & & & & \\ \hline \end{tabular} 8 Suppose we have a company that is considering undertaking a project. The annual cash flows and eauipment salvace values are provided below. WACC=10% How many years should this company keep the project going? The answer is either 1 year, 2 years, 3 years or 4 years. Note \#1: You don't need to consider anything else other than the information provided above. For example, taxes are already factored into these numbers. Note \#2: You might find Chapter 10 Tool Kit Answers tab beginning on row 483. Step 2: Add the PV of the onerating cash flows + salvaqe value to determine in which vear is the NPV maximized. \begin{tabular}{|l|c|c|c|c|c|c|c|} \hline & & NPV & \begin{tabular}{c} Initial \\ Cost \end{tabular} & + & \begin{tabular}{c} PV of \\ Cperating \\ Clows \end{tabular} & + & \begin{tabular}{c} PV of \\ Salvage \\ Value \end{tabular} \\ \hline Operate for 1 Year: & NPV1: & & & & & & \\ \hline Operate for 2 Years: & NPV2: & & & & & & \\ \hline Operate for 3 Years: & NPV3:: & & & & & & \\ \hline Operate for 4 Years: & NPV4: & & & & & & \\ \hline \end{tabular}