Exercise 26-14 (Static) Net present value of an annuity LO P3 Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $135,000. Project 2 requires an initial investment of $98,000. Assume the company requires a 10% rate of return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project 1 $ 100,000 Project 2 $ 80,000 65,000 32,000 20,000 18,000 8,000 20,000 $ 7,000 $ 10,000 Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. Note: Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar. Years 1-7 Present Value Project 1 Net Cash Flows x of Annuity at 10% = $ 7,000 x Net present value Present Value of Net Cash Flows = $ 0 Project 2 Net Cash Flows x Present Value of Annuity at 10% = Present Value of Net Cash Flows Years 1-5 $ 10,000 x = $ 0 Net present value