Bear Inc. (CABI) has a production facility in the White Mountains of New Hampshire where it receives orders and builds custom, theme- oriented teddy bears. The company has been operating at capacity for the last twelve months and management believes it is time to expand its operations and construct a new facility. The proposed new facility will double the current space and provide capacity for the expected growth over the next decade. Once the new facility is completed, the old facility can be rented for $20,000 annually. It is expected that the old building will be sold at the end of 15 years and the operation is expected to either move out of state or close. While the president of the company wants any new investments to have a payback period of three years or less, the CFO believes the best method to evaluate the project is by Net Present value. Data concerning the investment and expected benefits are as follows: New Building cost: $3,000,000 Annual increase in net operating income: $375,000 Annual Rent from old facility: $20,000 Sale of old facility in year 15: $550,000 Required Rate of return for Investments: 12% Expected life of the proposed new facility: 15 years. Present Value of an Annuity Factor : ( N = 15 and I = 12% ) = 6.8109 Present Value of a single cash flow ( N = 15 and I = 12% ) = 0.1827 As the newly hired assistant manager of finance reporting to the CFO, you have been asked to prepare the computations showing the projects Net Present Value. The CFO wants you to show all your work in case he wants to make any adjustments for intangible benefits.