16. A firm has the following information about a project. Income Statement 000) C C Cash revenue 16 14 12 Cash expenses 8 7 6 Gross profit 8 7 6 Depreciation 4 4 4 Net profit 4 3 2 The initial investment of the project is estimated as 12,000.

(a) Calculate the project's accounting rate of return.

(b) If it is found that the initial investment will be 9,000 and cash expenses will be more by *1,000 each year, what will be the project's accounting rate of return. Also, calculate the project's NPV if the cost of capital is 9 per cent. 17. An investment project has the following cash flows: Cash Flows (2) Co C +450 000 What are the rates of return of the investment? Assume a discount rate of 10 per cent. Is ther investment acceptable?