Net Present Value For discount factors use Exhibit 12B-1 and Exhibit 12B-2. Talmage Inc. has just completed development of a new printer. The new product is expected to produce annual revenues of $2,700,000. Producing the printer requires an investment in new equipment costing $2,880,000. The printer has a projected life cycle of 5 years. After 5 years, the equipment can be sold for $360,000. Working capital is also expected to decrease by $360,000, which Talmage will recover by the end of the new products life cycle. Annual cash operating expenses are estimated at $1,620,000. The required rate of return is 8%.

Required:

1. Prepare a schedule of the projected annual cash flows.

2. Calculate the NPV using only discount factors from Exhibit 12B.1

3. Calculate the NPV using discount factors from both Exhibits 12B.1 and 12B.2