Use Exhibit $12$B$.1$ and Exhibit $12$B$.2$ to locate the present value of an annuity of $$1,$ which is the amount to be multiplied times the future annual cash flow amount.

Each of the following scenarios is independent. Assume that all cash flows are after$-$tax cash flows.

a$.$ Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $$480,000$ per year. The system costs $$2,550,000$ and will last $10$ years.

$6$ years.

cash flows of $$135,000.$

Required:

Compute the NPV for Campbell Manufacturing, assuming a discount rate of $12\%.$ If required, round all present value calculations to the nearest dollar. Use the minus sign to indicate a negative NPV$.$

$x$

Should the company buy the new welding system?

a negative NPV$.$

s

x

Should she invest?

I

What if the estimated return was $$135,000$ per year? Calculate the new NPV for Evee Cardenas' investment. Would this affect the decision? What does this tell you about your analysis? Round to the nearest dollar.

$

$x$

The shop should now $$ be purchased. This reveals that the decision to accept or reject in this case is affected by differences in estimated cash flow $$

What was the required investment for Barker Company's project? Round to the nearest dollar. If required, round all present value calculations to the nearest dollar.

$