Net Present Value Carsen Sorensen, controller of Thayn Company, just received the following data associated with production of a new product: Expected annual revenues: $740,000 Projected product life cycle: five years Equipment: $740,000 with a salvage value of $100,000 after five years Expected increase in working capital: $120,000 (recoverable at the end of five years) Annual cash operating expenses: estimated at $444,000 Required rate of return: 8 percent The present value tables provided in Exhibit 198.1 and Exhibit 19B.2 must be used to solve the following problems. Required: 1. Estimate the annual cash flows for the new product. Enter cash outflows as negative amounts and cash inflows as positive amounts. Year Cash Flow 0 $ 0 1-4 $ 5 2. Using the estimated annual cash flows, calculate the NPV. ror. Assume the operating expenses remai the same. Enter cash hat if revenues were overestimat by $148,000? Redo the NPV analysis, correcting for this outflows as negative amounts and cash inflows as positive amounts. Van Cock Ela 5 2. Using the estimated annual cash flows, calculate the NPV. 3. What if revenues were overestimated by $148,000? Redo the NPV analysis, correcting for this error. Assume the operating expenses remain the same. Enter cash outflows as negative amounts and cash inflows as positive amounts. Year Cash Flow Present Value 0 $ 1-4 5 Net present value $ Feedback Check My Work 1. Be careful to consider whether the cash flows are negative or positive before adding them together for each year. The cash flow for working capital impacts the analysis twice but at different times. 2. When calculating NPV you will only use present value tables - future value tables will never be used. 3. Think about the impa of revenue to after tax cash flows to answer the