1. Estimate the NPV of the project using Free Cash Flow (FCF) to Equity, and discount the cash flows by cost of equity.

2. Estimate the NPV of the project using Capital Cash Flow method and discount the cash flows by WACC.

3. Estimate the NPV of the project using Free Cash Flow (FCF) to Equity, and discount the cash flows by WACC.

Exhibit 1 ($'000 Projected Balance Sheet Year 0 1 2 3 4 5 100 100 Equity 0 C 1000 1000 1000 1000 100 105 Debt 0 1100 1150 1200 1250 200 205 Total Laibilities 0 2100 2150 2200 2250 150 180 Gross Fixed Assets 0 2100 2400 2700 3000 Less Accumulated Depreciation 0 300 500 900 1200 1500 150 150 Net Fixed Assets 1500 1500 1500 1500 Working Capital 500 550 500 650 700 750 200 205 Total Assets 0 0 2100 2150 2200 2250 Exhibit 2 ($'000 Projected Income Statement Year 2 3 4 5 110 Revenue 0 1250 1400 1550 1700 Expenses 500 650 700 750 800 EBITDA 500 600 700 800 900 Interest Payments 70 73.5 77 80. 84 Depreciation 300 300 300 300 300 Profit Before Tax 130 226.5 323 419.5 516 Tax 52 90.6 129.2 167.8 206.4 Profit After Tax 135.9 193.8 251.7 309.6 Exhibit 3 ($'000 Free Cash Flow to Firm Year T 2 3 4 5 EBITDA 500 600 700 80 900 less depreciation -300 300 -300 300 300 EBIT 200 300 400 500 500 Tax @40% 120 160 200 240 PAT (unlevered) 120 180 240 300 360