Tatsumi Inc. has just completed development of a new printer. The new product is expected to produce annual revenues of $4,050,000. Producing the printer requires an investment in new equipment costing $4,320,000. The printer has a projected life cycle of 5 years. After 5 years, the equipment can be sold for $540,000. Working capital is also expected to decrease by $540,000, which Tatsumi will recover by the end of the new product's life cycle. Annual cash operating expenses are estimated at $2,430,000. The required rate of return is 8%.

Required:

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

Year	Item	Cash Flow
0	Equipment Operating expenses Recovery of working capital	$fill in the blank 2
0	EquipmentOperating expensesWorking capital	fill in the blank 4
0	Total	$fill in the blank 5
14	Equipment Revenues Salvage	$fill in the blank 7
14	EquipmentOperating expensesWorking capital	fill in the blank 9
14	Total	$fill in the blank 10
5	Equipment RevenuesWorking capital	$fill in the blank 12
5	EquipmentOperating expensesWorking capital	fill in the blank 14
5	EquipmentSalvageWorking capital	fill in the blank 16
5	EquipmentRecovery of working capitalWorking capital	fill in the blank 18
5	Total	$fill in the blank 19

2. Calculate the NPV using only discount factors from Exhibit 12B.1 fill in the blank 1 of 1$

3. Calculate the NPV using discount factors from both Exhibits 12B.1 and 12B.2 fill in the blank 1 of 1$