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: 1. Estimate the annual cash flows for the tablet project by completing the following table: Year(s) Item Cash Flow 0 Equipment $ Working capital Total $ 1-4 Revenues $ Operating expenses Total $ 5 Revenues $ Operating expenses 1-4 Revenues $ Operating expenses Total $ 5 Revenues $ Operating expenses Salvage Recovery of working capital Total $ 2. Using the estimated cash flows, calculate the NPV (round the discount factor to five decimal places and the present values to the nearest dollar): Please review the tab "PV Table for the present values. Discount Year Cash Flow Factor Present Value 0 $ $ 1 $ $ 2 $ $ 3 $ $ 4 $ $ 5 $ $ Net Present Value $ NPV = $ Thus, the project would be 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 o is The revised NPV is $ Thus, the project would be Scenario 2 A firm with a cost of capital of 10 percent is considering a new computer-aided design (CAD) system that costs $360,000 and will produce net cash inflows of $149,850 at the end of each year for the next three years. Required: 1. The discount factor associated with the IRR for the project (round to three decimal places): 2. IRR for the CAD system = % 3. The CAD system should be because the IRR is the required rate of return