2. Net Present Value Analysis - complete the table and answer the questions that follow. Assume: Capital Expenditure = $50,000 (i.e., the "costs of the investment) Useful life of expenditure = 5 years Annual return from expenditure = $9,000 (i.e., the "benefits of the investment) Value of investment at the end of the analysis period = $16,000 Discount rates to compare = 5% and 10%, compounded annually Use the formula (as discussed in Chapter 13): Present Value = Future Value divided by [ (1 plus the discount rate) n] Where n = the number of years into the future B A plus B What are the present values of future cash flows in "Year Zero" (ie, now, if I make this investment today), assuming each of these discount rates? 5% Discount 10% Discount Year Capital Invest & Salvage Value Annual Return in revenues from investment Net Cash Flow [+ or -) 0 Initial Investment =$50,000 na 1 $0.00 $9,000 N $0.00 $9,000 3 $0.00 $9,000 4 $0.00 $9,000 5 $16,000 = salvage value at end of Year 5 n.a. $9,000 Totals na. Based upon your estimates, would you proceed with the project at a discount rate of 5%? At a discount rate of 10%. Explain why