Net Present Value Carsen Sorensen, controller of Thayn Company, just received the following data associated with production of a new product: Expected annual revenues: $750,000 Projected product life cycle: five years Equipment: $720,000 with a salvage value of $100,000 after five years . Expected increase in working capital: $80,000 (recoverable at the end of five years) Annual cash operating expenses: estimated at $450,000 Required rate of return: 8 percent The present value tables provided in Exhibit 198.1 and Exhibit 198.2 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 0 1-4 S Cash Flow 2. Using the estimated annual cash flows, calculate the NPV. 3. What if revenues were overestimated by $150,000? Rede 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 D 1-4 S Net present value Cash Flow Present Value