Snow Inc. has just completed development of a new cell phone. The new product is expected to produce annual revenues of $1,400,000. Producing the cell phone requires an investment in new equipment, costing $1,500,000. The cell phone has a projected life cycle of 5 years. After 5 years, the equipment can be sold for $180,000. Working capital is also expected to decrease by $200,000, which Snow will recover by the end of the new products life cycle. Annual cash operating expenses are estimated at $820,000. 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 the Present Value of a Single Amount table shown in Present Value Tables. 3. Calculate the NPV using discount factors from both of the tables shown in Present Value Tables.

Instructions Snow Inc. has just completed development of a new cell phone. The new product is expected to produce annual revenues of $1,400,000. Producing the cell phone requires an investment in new equipment, costing $1,500,000. The cell phone has a projected life cycle of 5 years. After 5 years, the equipment can be sold for $180,000. Working capital is also expected to decrease by $200,000, which Snow will recover by the end of the new product's life cycle. Annual cash operating expenses are estimated at $820,000. 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 the Present Value of a Single Amount table shown in Present Value Tables 3. Calculate the NPV using discount factors from both of the tables shown in Present Value Tables Amount Descriptions Refer to the list below for the exact wording of an amount description within your schedule. Amount Descriptions Equipment Operating expenses Recovery of working capital Revenues Salvage Total Working capital Present Value of an Annuity* 8% 9% nli 1% 2% 3% 4% 5% 6% 7% 10% 12% 14% 16% 18% 20% 25% 30% 1 0.99010 0.98039 0.97087 0.96154 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909 0.89286 0.87719 0.86207 0.84746 0.83333 0.80000 0.76923 2 1.97040 1.94156 1.91347 1.88609 1.85941 1.83339 1.80802 1.78326 1.75911 1.73554 1.69005 1.64666 1.60523 1.56564 1.52778 1.44000 1.36095 3 2.94099 2.88388 2.82861 2.77509 2.72325 2.67301 2.62432 2.57710 2.53129 2.48685 2.40183 2.32163 2.24589 2.17427 2.10648 1.95200 1.81611 4 3.90197 3.80773 3.71710 3.62990 3.54595 3.46511 3.38721 3.31213 3.23972 3.16987 3.03735 2.91371 2.79818 2.69006 2.58873 2.36160 2.16624 5 5 4.85343 4.71346 4.57971 4.45182 4.32948 4.21236 4.10020 3.99271 3.88965 3.79079 3.60478 3.43308 3.27429 3.12717 2.99061 2.68928 2.43557 6 5.79548 5.60143 5.41719 5.07569 4.91732 4.76654 4.62288 4.48592 4.35526 4.11141 3.88867 3.68474 3.49760 3.32551 2.95142 2.64275 5.24214 6.00205 7 6.72819 6.47199 6.23028 5.78637 5.58238 5.38929 5.20637 5.03295 4.86842 4.56376 4.28830 4.03857 3.81153 3.60459 3.16114 2.80211 8 7.65168 7.32548 7.01969 6.73274 6.46321 6.20979 5.97130 5.74664 5.53482 5.33493 4.96764 4.63886 4.34359 4.07757 3.83716 3.32891 2.92470 9 8.56602 8.16224 7.78611 7.43533 7.10782 6.80169 6.51523 6.24689 5.99525 5.75902 5.32825 4.94637 4.60654 4.30302 4.03097 3.46313 3.01900 10 9.47130 8.98259 8.53020 8.11090 7.72173 7.36009 7.02358 6.71008 6.41766 6.14457 5.65022 5.21612 4.83323 4.49409 4.19247 3.57050 3.09154 11 10.36763 9.78685 9.25262 8.76048 8.30641 7.88687 7.49867 7.13896 6.80519 6.49506 5.93770 5.45273 5.02864 4.65601 4.32706 3.65640 3.14734 12 11.25508 10.57534 9.95400 9.38507 8.86325 8.38384 7.94269 7.53608 7.16073 6.81369 6.19437 5.66029 5.19711 4.79322 4.43922 3.72512 3.19026 13 12.13374 11.34837 10.63496 9.98565 9.39357 8.85268 8.35765 7.90378 7.48690 7.10336 6.42355 5.84236 5.34233 4.90951 4.53268 3.78010 3.22328 14 13.00370 12.10625 11.29607 10.56312 9.89864 9.29498 8.74547 8.24424 7.78615 7.36669 6.62817 6.00207 5.46753 5.00806 4.61057 3.82408 3.24867 15 13.86505 12.84926 11.93794 11.11839 10.37966 9.71225 9.10791 8.55948 8.06069 7.60608 6.81086 6.14217 5.57546 5.09158 4.67547 3.85926 3.26821 16 14.71787 13.57771 12.56110 11.65230 10.83777 10.10590 9.44665 8.85137 8.3125 7.82371 6.97399 6.26506 5.66850 5.16235 4.72956 3.88741 3.28324 17 15.56225 14.29187 13.16612 12.16567 11.27407 10.47726 9.76322 9.12164 8.54363 8.02155 7.11963 6.37286 5.74870 5.22233 4.77463 3.90993 3.29480 18 16.39827 14.99203 13.75351 12.65930 11.68959 10.82760 10.05909 9.37189 8.75563 8. 20141 7.24967 6.46742 5.81785 5.27316 4.81219 3.92794 3.30369 19 17.22601 15.67846 14.32380 13.13394 12.08532 11.15812 10.33560 9.60360 8.95011 8.36492 7.36578 6.55037 5.87746 5.31624 4.84350 3.94235 3.31053 20 18.04555 16.35143 14.87747 13.59033 12.46221 11.46992 10.59401 9.81815 9.12855 8.51356 7.46944 6.62313 5.92884 5.35275 4.86958 3.95388 3.31579 21 18.85698 17.01121 15.41502 14.02916 12.82115 11.76408 10.83553 10.01680 9.29224 8.64869 7.56200 6.68696 5.97314 5.38368 4.89132 3.96311 3.31984 22 19.66038 17.65805 15.93692 14.45112 13.16300 12.04158 11.06124 10.20074 9.44243 8.77154 7.64465 6.74294 6.01133 5.40990 4.90943 3.97049 3.32296 23 20.45582 18.29220 16.44361 14.85684 13.48857 12.30338 11.27219 10.37106 9.58021 8.88322 7.71843 6.79206 6.04425 5.43212 4.92453 3.97639 3.32535 24 21.24339 18.91393 16.93554 15 24696 13.79864 12.55036 11.46933 10.52876 9.70661 8.98474 7.78432 6.83514 6.07263 5.45095 4.93710 3.98111 3.32719 25 22.02316 19.52346 17.41315 15.62208 14.09394 12.78336 11.65358 10.67478 9.82258 9.07704 7.84314 6.87293 6.09709 5.46691 4.94759 3.98489 3.32861 26 22.79520 20.12104 17.87684 15.98277 14.37519 13.00317 11.82578 10.80998 9.92897 9.16095 7.89566 6.90608 6.11818 5.48043 4.95632 3.98791 3.32970 27 23.55961 20.70690 18.32703 16.32959 14.64303 13.21053 11.98671 10.93516 10 02658 9.23722 7.94255 6.93515 6.13636 5.49189 4.96360 3.99033 3.33054 28 24.31644 21.28127 18.76411 16.66306 14.89813 13.40616 12.13711 11.05108 10.11613 9.30657 7.98442 6.96066 6.15204 5.50160 4.96967 3.99226 3.33118 29 25.06579 21.84438 19.18845 16.98371 15.14107 13.59072 12.27767 11.15841 10.19828 9.36961 8.02181 6.98304 6.16555 5.50983 4.97472 3.99381 3.33168 30 25.80771 22.39646 19.60044 17.29203 15.37245 13.76483 12.40904 11.25778 10.27365 9.42691 8.05518 7.00266 6.17720 5.51681 4.97894 3.99505 3.33206 Present Value of a Single Amount* 7% 8% 9% 10% nli 1% 2% 3% 4% 5% 6% 12% 14% 16% 18% 20% 25% 30% 1 1 0.99010 0.98039 0.97087 0.96154 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909 0.89286 0.87719 0.86207 0.84746 0.83333 0.80000 0.76923 2 0.98030 0.96117 0.94260 0.92456 0.90703 0.89000 0.87344 0.85734 0.84168 0.82645 0.79719 0.76947 0.74316 0.71818 0.69444 0.64000 0.59172 3 0.97059 0.94232 0.91514 0.88900 0.86384 0.83962 0.81630 0.79383 0.77218 0.75131 0.71178 0.67497 0.64066 0.60863 0.57870 0.51200 0.45517 4 0.96098 0.92385 0.88849 0.85480 0.82270 0.79209 0.76290 0.73503 0.70843 0.68301 0.63552 0.59208 0.55229 0.51579 0.48225 0.40960 0.35013 5 0.95147 0.90573 0.86261 0.82193 0.78353 0.74726 0.71299 0.68058 0.64993 0.62092 0.56743 0.51937 0.47611 0.43711 0.40188 0.32768 0.26933 6 0.94205 0.88797 0.83748 0.79031 0.74622 0.70496 0.66634 0.63017 0.59627 0.56447 0.50663 0.45559 0.41044 0.37043 0.33490 0.26214 0.20718 7 0.93272 0.87056 0.81309 0.75992 0.71068 0.66506 0.62275 0.58349 0.54703 0.51316 0.45235 0.39964 0.35383 0.31393 0.27908 0.20972 0.15937 8 0.92348 0.85349 0.78941 0.73069 0.67684 0.62741 0.58201 0.54027 0.50187 0.46651 0.40388 0.35056 0.30503 0.26604 0.23257 0.16777 0.12259 0 9 0.91434 0.83676 0.76642 0.70259 0.64461 0.59190 0.54393 0.50025 0.46043 0.42410 0.36061 0.30751 0.26295 0.22546 0.19381 0.13422 0.09430 10 0.90529 0.82035 0.74409 0.67556 0.61391 0.55839 0.50835 0.46319 0.42241 0.38554 0.32197 0.26974 0.22668 0.19106 0.16151 0.10737 0.07254 11 0.89632 0.80426 0.72242 0.64958 0.58468 0.52679 0.47509 0.42888 0.38753 0.35049 0.28748 0.23662 0.19542 0.16192 0.13459 0.08590 0.05580 12 0.88745 0.78849 0.70138 0.62460 0.55684 0.49697 0.44401 0.39711 0.35553 0.31863 0.25668 0.20756 0.16846 0.13722 0.11216 0.06872 0.04292 0 13 0.87866 0.77303 0.68095 0.60057 0.53032 0.46884 0.41496 0.36770 0.32618 0.28966 0.22917 0.18207 0.14523 0.11629 0.09346 0.05498 0.03302 14 0.86996 0.75788 0.66112 0.57748 0.50507 0.44230 0.38782 0.34046 0.29925 0.26333 0.20462 0.15971 0.12520 0.09855 0.07789 0.04398 0.02540 15 0.86135 0.74301 0.64186 0.55526 0.48102 0.41727 0.36245 0.31524 0.27454 0.23939 0.18270 0.14010 0.10793 0.08352 0.06491 0.03518 0.01954 16 0.85282 0.72845 0.62317 0.53391 0.45811 0.39365 0.33873 0.29189 0.25187 0.21763 0.16312 0.12289 0.09304 0.07078 0.05409 0.02815 0.01503 17 0.84438 0.71416 0.60502 0.51337 0.43630 0.37136 0.31657 0.27027 0.23107 0.19784 0.14564 0.10780 0.08021 0.05998 0.04507 0.02252 0.01156 18 0.83602 0.70016 0.58739 0.49363 0.41552 0.35034 0.29586 0.25025 0.21199 0.17986 0.13004 0.09456 0.06914 0.05083 0.03756 0.01801 0.00889 19 0.82774 0.68643 0.57029 0.47464 0.39573 0.33051 0.27651 0.23171 0.19449 0.16351 0.11611 0.08295 0.05139 0.04308 0.03130 0.01441 0.00684 20 0.81954 0.67297 0.55368 0.45639 0.37689 0.31180 0.25842 0.21455 0.17843 0.14864 0.10367 0.07276 0.05139 0.03651 0.02608 0.01153 0.00526 21 0.81143 0.65978 0.53755 0.43883 0.35894 0.29416 0.24151 0.19866 0.16370 0.13513 0.09256 0.06383 0.04430 0.03094 0.02174 0.00922 0.00405 22 0.80340 0.64684 0.52189 0.42196 0.34185 0.27751 0.22571 0.18394 0.15018 0.12285 0.08264 0.05599 0.03819 0.02622 0.01811 0.00738 0.00311 23 0.79544 0.63416 0.50669 0.40573 0.32557 0.26180 0.21095 0.17032 0.13778 0.11168 0.07379 0.04911 0.03292 0.02222 0.01509 0.00590 0.00239 24 0.78757 0.62172 0.49193 0.39012 0.31007 0.24698 0.19715 0.15770 0.12640 0.10153 0.06588 0.04308 0.02838 0.01883 0.01258 0.00472 0.00184 25 0.77977 0.60953 0.47761 0.37512 0.29530 0.23300 0.18425 0.14602 0.11597 0.09230 0.05882 0.03779 0.02447 0.01596 0.01048 0.00378 0.00142 26 0.77205 0.59758 0.46369 0.36069 0.28124 0.21981 0.17220 0.13520 0.10639 0.08391 0.05252 0.03315 0.02109 0.01352 0.00874 0.00302 0.00109 27 0.76440 0.58586 0.45019 0.34682 0.26785 0.20737 0.16093 0.12519 0.09761 0.07628 0.04689 0.02908 0.01818 0.01146 0.00728 0.00242 0.00084 28 0.75684 0.57437 0.43708 0.33348 0.25509 0.19563 0.15040 0.11591 0.08955 0.06934 0.04187 0.02551 0.01567 0.00971 0.00607 0.00193 0.00065 29 0.74934 0.56311 0.42435 0.32065 0.24295 0.18456 0.14056 0.10733 0.08215 0.06304 0.03738 0.02237 0.01351 0.00823 0.00506 0.00155 0.00050 30 0.74192 0.55207 0.41199 0.30832 0.23138 0.17411 0.13137 0.09938 0.07537 0.05731 0.03338 0.01963 0.01165 0.00697 0.00421 0.00124 0.00038 leuwie Ur Las Fiews 1. Prepare a schedule of the projected annual cash flows. Refer to the list of Amount Descriptions for the exact wording of text items within your schedule. If an amount is negative or an outflow, first enter a minus sign (-) Snow Inc. Projected Annual Cash Flows 1 Year 0 3 4 5 Years 1-4 6 7 8 9 Year 5 10 11 12 13 14 NPV Calculations 2. Calculate the NPV using only discount factors from the Present Value of a Single Amount table shown Present Value Tables. Round the present value calculation and your final answer to the nearest whole dollar. The NPV using the present value of a single amount table is S 3. Calculate the NPV using discount factors from both of the tables shown in Present Value Tables. Round the present value calculation and your final answer to the nearest whole dollar. The NPV using the annuity tables is $