The new decals would cost $15,000 per location or $2,955,000 for all 197 locations and will result in an annual return of $985,000 due to a decrease in liability claims. The decals have no salvage value at the end of their seven (7) year life span. The income tax rate is 40 percent. The executive officers will want to see all the calculations in responding to the following: a) Determine whether the decals will have a positive net present value if the minimum acceptable rate of return is 10 percent per year compounded annually? (Factor = 4.868) b) The Risk Manager had some difficulty in convincing the executive officers of the $985,000 savings which in turn could be viewed as additional annual revenue. If the following probability distribution applied to each year's additional revenue and the executive officers wanted to make its decisions on the basis of the expected value of this additional revenue, should they invest in the decals? Probability % .10 .35 .25 .15 .10 .05 Additional Savings/Revenue $ 750,000 985,000 1,025,000 1,200,000 1,350,000 1,700,000