Holland Inc. has just completed development of a new cell phone. The new product is expected to produce annual revenues of $1,350,000. Producing the cell phone requires an investment in new equipment, costing $1,440,000. The cell phone has a projected life cycle of 5 years. After 5 years, the equipment can be sold for $180,000. Working capital is also expected to increase by $180,000, which Holland will recover by the end of the new product's life cycle. Annual cash operating expenses are estimated at $810,000. The required rate of return is 8%.

Required:

1. Prepare a schedule of the projected annual cash flows.

2. Calculate the NPV using only discount factors from the Present Value of a Single Amount table shown in Present Value Tables.

3. Calculate the NPV using discount factors from both of the tables shown in Present Value Tables.