Boulder Creek Industries is considering an investment in equipment based on the following estimates:

Cost of equipment$3,000,000Residual value200,000Useful life10 years

a. Determine the net present value of the equipment, assuming a desired rate of return of 12% and annual net cash flows of $800,000. Use the present value tables appearing in Exhibit 2 and 5 of this chapter.

Net present value $fill in the blank 1

b. Determine the net present value of the equipment, assuming a desired rate of return of 12% and annual net cash flows of $400,000, $600,000, and $800,000. Use the present value tables (Exhibit 2 and 5) provided in the chapter in determining your answer. If required, use the minus sign to indicate a negative net present value.

Annual Net Cash Flow$400,000$600,000$800,000Net present value$fill in the blank 2$fill in the blank 3$fill in the blank 4

c. Determine the net present value of the equipment, assuming a desired rate of return of 15% and annual net cash flows of $400,000, $600,000, and $800,000. Use the present value tables (Exhibit 2 and 5) provided in the chapter in determining your answer. If required, use the minus sign to indicate a negative net present value.

Annual Net Cash Flow$400,000$600,000$800,000Net present value$fill in the blank 5$fill in the blank 6$fill in the blank 7

d. Determine the minimum annual net cash flow necessary to generate a positive net present value, assuming a desired rate of return of 12%. Round to the nearest dollar.

Annual Net Cash Flow $fill in the blank 8