Vancouver Shakespearean Theaters board of directors is considering the replacement of the theaters lighting system. The old system requires two people to operate it, but the new system would require only a single operator. The new lighting system will cost $129,750 and save the theater $27,000 annually for the next eight years.

1-a. Prepare a table showing the proposed lighting systems net present value for each of the following discount rates: 8 percent, 10 percent, 12 percent, 14 percent, and 16 percent.

Discount Rate Annuity Discount Factor Annual Savings Present Value of Annual Savings Acquisition Cost Net Present Value 8% 5.747 $ 27,000 10% 5.335 27,000 12% 4.968 27,000 27,000 129,750 129,750 129,750 129,750 129,750 14% 16% 4.344 27,000