eEgg is considering the purchase of a new distributed network computer system to help handle its warehouse inventories. The system costs $55,000 to purchase and install and $32,000 to operate each year. The system is estimated to be useful for 4 years. Management expects the new system to reduce the cost of managing inventories by $60,000 per year. The firm's cost of capital (discount rate) is 10%. Required: 1. What is the net present value (NPV) of the proposed investment under each of the following independent situations? (Use the appropriate present value factors from Appendix C. TABLE 1 and Appendix C, TABLE 2.) 1a. The firm is not yet profitable and therefore pays no income taxes. 1b. The firm is in the 22% income tax bracket and uses straight-line (SLN) depreciation with no salvage value. Assume MACRS rules do not apply. 1c. The firm is in the 22% income tax bracket and uses double-declining-balance (DDB) depreciation with no salvage value. Given a four-year life, the DDB depreciation rate is 50% (i.e., 2 x 25%). In year four, record depreciation expense as the net book value (NBV) of the asset at the start of the year. 2. What is the internal rate of return (IRR) of the proposed investment for situations in requirement 1, parts (a) through (c)? Use the IRR builit-in function in Excel to compute the IRR. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Req 2 The firm is not yet profitable and therefore pays no income taxes. (Round your answer to Net present value TABLE 1 Present Value of $1 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 20% 25% 30% 1 0.962 0.952 0.943 0.935 0.926 2 0.925 0.907 0.890 0.873 0.857 0.842 0.826 3 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.917 0.909 0.901 0.893 0.812 0.797 0.783 0.769 0.756 0.675 0.658 0.885 0.877 0.870 0.833 0.800 0.769 0.694 0.640 0.592 0.712 0.693 0.579 0.512 0.455 4 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.482 0.410 0.350 5 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.402 0.328 0.269 6 0,790 0,746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.432 0335 0.262 0.207 7 0,760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.376 0.279 0.210 0.159 8 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0,404 0.376 0.351 0.327 0.233 0.168 0.123 9 0.703 0.645 0.592 0.544 0.500 0.460 0,424 0.391 0.361 0.333 0.308 0.284 0.194 0.134 0.094 10 0,676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.162 0.107 0.073 11 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.135 0.086 0,056 12 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.257 0.286 0.231 0.208 0.187 0.112 0.069 0.043 13 0.601 0.530 0.469 0415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 0.163 0.093 0.055 0.033 14 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 0.181 0.160 0.141 0.078 0.044 0.025 15 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0.123 0.065 0.035 0.020 16 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.188 0.163 0.141 0.123 0.107 0.054 0.028 0.015 17 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.170 0.146 0.125 0.108 0.093 0.045 0.023 0.012 18 0.494 0.416 0.350 0.296 0.250 0212 0.180 0.153 0.130 0.111 0.095 0.081 0.018 0.038 0.009 19 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 0.098 0.083 0.070 0.031 0.014 0.007 20 0.456 0.377 0.312 0.258 0.215 0.178- 0.149 0.124 0.104 0.087 0.073 0.061 0.026 0.012 0.005 22 0.422 0.342 0.278 0.226 0.184 0.150 0.1231 0.101 0.083 0.068 0.056 0.046 0.018 0.007 0.003 24 0.390 0.310 0.247 0.197 0.158 0126 0.102 0.082 0.066 0.053 0.043 0.035 0.013 0.005 0.002 25 0.375 0.295 0.233 0.184 0.146 0.116 0.092 0.074 0.059 0.047 0.038 0.030 0.010 0.004 0.001 30 0.308 0.231 0.174 0.131 0.099 0.075 0.057 0.044 0.033 0.026 0.020 0.015 0.004 0.001 0.000 351 0.253 0.181 0.130 0.094 0.068 40 0.208 0.142 0.097 0.067 0.046 0.049 0.036 0.032 0.026 0.022 0.015 0.019 0.014 0.010 0.008 0.002 0.000 0.000 0.011 0.008 0.005 0.004) 0.001 0.000 0.000 Note: The present value (PV) factor for N periods and rate r per period-1-(1+r)". For example, the PV factor for 10%, 5 years-1-(1-0.10)-0.621 (rounded) TABLE 2 Present Value of Annuity of $1 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 1 0.962 0.952 0943 0.935 0.926 0.917 0.909 0.901 0.893 2 1.886 1.859 1.833 1.808 1.783 1.759 3 2.775 2.723 2.673 2.624 2.577 2.531 4 3.630 3.546 3.465 3.387 3.312 3.240 5 4.452 4.329 4.212 4.100 3.993 3.890 1.736 1.713 1.690 2487 2.444 2.402 3.170 3.102 3.791 3.696 15% 20% 25% 30% 0.885 0.877 0.870 0.833 0.800 0.769 1.668 1.647 1.6261 1.528 1.440 1361 2.361 2.322 2.283 2.106 1.952 1.816 3.037 2.974 2.914 2.855 2.589 2.362 2.166 3.605 3.517 3.433 3.352 2.991 2.689 2436 6 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4231 3.998 3.889 3.784 3.326 2.951 2643 7 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.712 4.564 4.423 4.288 4.160 3.605 3.161 2.802 8 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 4.799 4.639 4.487 3.837 3.329 2.925 9 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.537 5.328 5.132 4.946 4.772 4.031 3.463 3.019 10 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.889 5.650 5.426 5.216 5.019 4.192 3:571 3.092 11 8.760 8.306 7.887 7.499 7.139 6.805 6.495 6.207 5.938 5.687 5453 5.234 4327 3.656 3.147 12 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.492 6.194 5.918 5.660 5421 4.439 3.725 3.190 13 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.750 6.424 6.1221 5.842 5.583 4.533 3.780 3.223 14 10.563 9.899 9.295 8.745 8.2441 7.786 7.367 6.982 6.628 6.302 6.002 5.724 4.611 3.824 3249 15 11.118 10.380 9.712 9.108 8.559 8.061 7.606 7.191 6.811 6.462 6.142 5.847 4.675 3.859 3.268 16 11.652 10.838 10.106) 9.447 8.851 8.313 7.824 7.379 6.974 6.604 6.265 5.954 4.730 3.8871 3.283 17 12.166 11.274 10.4771 9.763 9.122 8.544 8.022 7.549 7.120 6.729 6.373 6.047 4.775 3.910 3.295 18 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.702 7.250 6.840 6.467 6.128 4.812 3.928 3.304 19 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.839 7.366 6.938 6.550 6.198 4.843 3.942 3.311 20 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.469 7.963 7.025 6.623 6.259 3.954 4.870 3.316 22 14.451 13.163 12.042 11.061 10.201 9.442 8.772 8.176 7.645 6.743 7.170 6.359 4.909 3.970 3.321 24 15.247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 7.784 7.283 6.835 6.434 4.937 3.981 3327 25 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7.843 7.330 6.873 4.948 6.464 3.985 3.329 30 35 18.665 40 19.793 13.765 17.292 15.372 16.374 14.498 15.046 17.159 8.694 12.409 11.258 10.274 8.855 9.644 10.567 11.655 12.948 9.779 10.757 8.951 11.925 13.332 9.427 8.055 7.003 7.496 6.617 8.176 7.586 7.070 7.634 7.105 6.642 8.244 6.566 4.979 3.995 3.332 4.992 3.998 3.333 4.997 3.999 3333 Note: The present value (PV) annuity factor for N periods and a rate of r per period-[1-(1+r). For example, for N-5 and -0.10, the PV annuity factor-3.791 (rounded) Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Req 2 The firm is in the 22% income tax bracket and uses straight-line (SLN) depreciation with rules do not apply. (Round your answer to nearest whole dollar amount.) Net present value < Req 1A Req 1C > Req 1A Req 1B Req 1C Req 2 The firm is in the 22% income tax bracket and uses double-declining-balance (DDB) depreciation with no sal four-year life, the DDB depreciation rate is 50% (i.e., 2 x 25%). In year four, record depreciation expense as (NBV) of the asset at the start of the year. (Negative amounts should be indicated by a minus sign. Round dis decimal places and other answers to the nearest whole dollar amount.) Year Pre-Tax Cash Inflows DDB Depreciation Expense Taxable Income Income Taxes: After-tax Net Cash Inflow Discount Factor Present Values 0 1 2 3 4 Net present value (NPV): < Req 1B Req 2 Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Req 2 What is the internal rate of return (IRR) of the proposed investment for situations in requirement 1, parts (a) through (c)? Use the IRR built-in function in Excel to compute the IRR. (Round "Estimated IRR" to 1 decimal place.) Estimated IRR a. % b. % C. %