Management is trying to decide whether or not to build a new factory. They believe sales are

increasing for their products. They have estimated revenues of $$110,000$ in year one, $$90,000$ in

years two through ten. In $10$ years the factory is obsolete.

They estimate expenses annually to operate the factory after year $1$ would be $$35,000.$

The cost of the new factory is $$400,000.$ The payments required are $$80,000$ immediately with the

remainder due through annual payments.

The company has hurdle rate of $10\%.$

Use these tables to solve the problems.

a$.$ What is the net present value of this new factory? $($Note that if your answer is negative then

you need to place parentheses around it$)$

s

b$.$ What would the net present value be if the factory only produces goods for $9$ years?

Present value of $$1$

Present value of an annuity