asic Net Present Value Analysis eginning. This will be recovered at the end of the $7$ years.

In the positive side, Jonathan estimates that the new process will save $$350,000$ per year in environmental costs $($fines and cleanup costs avoided$).$ The cost of capital is $8\%.$

his information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

pen spreadsheet

equired:

wo present value tables are provided: Present Value of a Single Amount and Present Value of an Annuity. Use them as directed in the problem requirements.

$.$ Prepare a schedule of cash flows for the proposed project. $($Assume that there are no income taxes.$)$ If an amount is negative or an outflow, first enter a minus sign $(-).$

Schedule of Cash Flows

Years $1-7$

Cost savings

Equipment operating costs

$$

$$-1,000,000$

$q,$

rotal $q,$

Years $5$

verhaul

$4$

Salvage value $$

$$

Recovery of working capital

$q,$

rotal $q,$

he NPV of the project is $q,$ x $.$

$($b$)$ Should the new process design be accepted?