EXERCISE 5: ANNUAL AND CUMULATIVE PRESENT VALUES Use 10% as the companys weighted average cost of capital and the estimates shown below to calculate the following values for a manufacturing plant:

1. The yearly present values ?

2. The cumulative net present values?

In millions year1 year2 year3 year4 year5

Projected profit for the year $3 $3.4 $3.9 $4.3 $4.8

Projected capital cost allowance $1.1 $1.2 $1.3 $1.4 $1.5

Projected incremental investment in working capital $0.6 $0.5 $0.6 $1.0 $0.5