After one year using the TopCap system, Jonathan Smith, vice president for marketing at C&C Sports, is convinced that the company could sell even more baseball caps. Apparently, the market demand for plain caps that are suitable for logo embroidery by corporations, fraternities, and other groups is greater than current manufacturers can supply. The potential for C&C Sports to extend its sales of baseball caps beyond the athletic team market is huge The initial specifications for the TopCap system required three workers per eight-hour shift to make up to 1,000 caps per day. Based on initial demand forecasts, Jonathan asked Chad Davis, vice president for operations, to make 250,000 caps in the first year the product was offered. Jonathan is convinced that C&C could sell at least 500,000 caps per year with the correct investment in marketing The Cash flow reflects making 250,000 caps. Cash Flow Amount Sales revenue $625,000 50,265 500,000 57,600 37,500 12,500 7,000 Purchase and installation of TopCap system Purchase of direct materials Direct labor Variable overhead Variable selling expense Fixed expenses Click here to view the factor table (a) Calculate the Net present Value of the increase in annual operating income if a second shift was used to produce additional caps? Assume that the relevant range for the fixed costs is 750,000 caps. Remember that there are only 9 years of usable life remaining for the TopCap system and that C&C Sports uses a 12% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 2 decimal places, e.g. 589.71.) Net Present Value $