Scenario 1 Star Company is considering production of a surface tablet with the following associated data: Expected annual revenues, $3,000,000 A projected product life cycle of five years Equipment costs $3,200,000 with a salvage value of $400,000 after five years. Expected increase in working capital, $400,000 (recoverable at the end of five years). Annual cash operating expenses are estimated at $1,800,000 The required rate of return is 12 percent. Required: 3. Assume that the cost of equipment is now changed to $5,600,000 instead of the initial $3,600,000 and all the other estimations for the cash flows remain the same as stated earlier. If an answer is negative, enter the value with "-" sign. The Estimate of the annual cash flow for year 0 is: -5,600,000 x The revised NPV is -$820,327 X Thus, the project would be accepted Points 10/1 Points: 10/1 Points: 1/1 Scenario 2 A firm with a cost of capital of 10 percent is considering a new computer- year for the next three years. mputer-aided design (CAD) system that costs $360,000 and will produce net cash inflows of $149,850 at the end of each Required: 1. The discount factor associated with the IRR for the project (round to three decimal places): 11.986 X 2 IRR for the CAD system 11X% 3. The CAD system should be accepted because the IRR is greater than the required rate of retur Points 10/1 Points 10/1 Points 12/2