Cupcakes-R-Us, Inc. is reviewing all available information regarding the future use of its baking equipment, which it intends to use for the foreseeable future. (Click the icon to view additional information.) Future Value of $1 table Future Value of an Ordinary Annuity table Future Value of an Annuity Due table Present Value of $1 table Present Value of an Ordinary Annuity table Present Value of an Annuity Due table Read the requirements. Requirement a. Compute the carrying value of Cupcakes-R-Us's equipment. ble dit The carrying value of the baking equipment at the end of two years is $ 360,000. Requirement D. Compute the present value or expected cash nows under Esumate 1 and Estimate 2. Assume that the cost of capital is 8%. For each estimate, is the present value of estimated future cash flows higher or lower than the equipment's carrying value? Begin by calculating the present value (PV) of estimated future cash flows for Estimate 1. In the following steps, calculate the PV of estimated future cash flows for Estimate 2, and then identify if the present value of the estimated future cash flows is higher or lower than the equipment's carrying value. (Use the present value and future value tables, the formula method, a financial calculator, or a spreadsheet for your calculations. If using present and future value tables or the formula method, use factor amounts pounded to five decimal places, X.XXXXX. Round intermediary calculations and your final answers to the nearest whole dollar.) Cash-Flow Projection- PV of Cash-Flow Cash Flow PV of Cash-Flow Projection- Projection- Projection- Future Period Estimate 1 Estimate 1 Estimate 2 Estimate 2 Year 1 120,000 $ 111,111 $ 120,000 $ 111,111 Year 2 100,000 85,734 100,000 85,734 dit Year 3 70,000 55,568 80,000 63,507 Year 4 35,000 25,726 35,000 25,726 Year 5 30,000 20,417 30,000 20,417 $ Total 355,000 $ 298,557 $ 365,000 $ 306,495 PV higher or lower than carrying value? Lower Lower Requirement c. Conduct the impairment tests for Cupcakes-R-Us under Estimate 1 and Estimate 2. If required, prepare the journal entry to record any impairment loss. Start with Step 1 of the impairment test. (Complete all input fields.) Step 1: Estimate 1 Estimate 2 Carrying value at year-end $ 360,000 360,000 Undiscounted future cash flows 355,000 365,000 Impairment indicated? Yes No Now complete Step 2 of the impairment test. For each estimate, select whether Step 2 of the test is required on the first line. If the test is not required, leave all remaining cells in that column blank. (If the test is not required, leave all remaining cells in that column blank. However, if the test is required, but no impairment loss exists, then leave only the impairment loss input cell blank in that column.) Step 2: Estimate 1 Estimate 2 Step 2 required? Impairment loss dit Carrying value at year-end Fair value at year-end Undiscounted future cash flows or each estimate, select whether Step 2 of the test is required on the aining cells in that column blank. (If the test is not required, leave all if the test is required, but no impairment loss exists, then leave only mn.) ate 1 Estimate 2 Impairment loss