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Follow the format shown in Exhibit 128.1 and Exhibit 128.2 as you complete the requirements below, Each of the following scenarios is independent. Assume that all cash fiows are after-tax cash flows: a. Cuenca Company is considering the purchase of now equipment that will speed up the process for producing fiash drives. The equiprnent will cost $7,200,000 and have a life of 5 years with no expected salvage value. The expected cash fows associated with the project follow: b. Kathy Shorts is evaluating an investment in an information system that will save $240,000 per year, 5 he estimates that the system will last 10 years. The system will cost $1,24,000. Her company's cost of capital is 10%. c. Elmo Enterprises just announced that a new plant would be buit in Helper, Utah. Eimo told its stockholders that the plant has an expected life of 15 years and an expected thR equal to 25%. The cost of building the plant is expected to be $2,880,000. Requiredi 1. Calculate the IRR for Cuenca Company. The company's cost of capital is 16\%. Round your answer to the nearest percent. Should the new equipment be purchased? b. Kathy Shorts is evaluating an investment in an information system that will save $240,000 per year. She estimates that the system will last 10 years. The system will cost $1,248,000. Her company's cost of capital is 10%. c. Elmo Enterprises just announced that a new plant would be built in Helper, Utah. Elmo told its stockholders that the plant has an expected life of 15 years and an expected IRR equal to 25%, The cost of building the plant is expected to be $2,880,000. Required: 1. Calculate the IRR for Cuenca Company. The company's cost of capital is 16%. Round your answer to the nearest percent. \% Should the new equipment be purchased? 2. Calculate Kathy Short's IRR. Round your answer to the nearest percent. Should she acquire the new system? 3. What should be Elmo Enterprises' expected annusl cash flow from the plant? Round your answer to the nearest dollar. Exhibit 12B.1 Present Value of a Single Amount Exhibit 12B.2 Present Value of an Annuity*

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