1. Fill in the blank in the following equation to calculate the annual net cash flow to Project A.

( 5M - [ 1.1 ] - [ 1.2 ] ) ( 1 - 0.4 ) + [ 1.3 ]

[ 1.1 ] =

[ 1.2 ] =

[ 1.3 ] =

2. Fill in the blank in the following equation to calculate the annual net cash flow to Project A.

( 4M - [ 2.1 ] - [ 2.2 ] ) ( 1 - 0.4 ) + [ 2.3 ]

[ 2.1 ] =

[ 2.2 ] =

[ 2.3 ] =

22. You are considering two mutually exclusive investment projects with the following patterns of future cash flows: Initial cash outlay Annual revenues Annual operating expenses (excluding depreciation) Project A S3 million S5 million $2 million Project B S3 million S4 million S1.2 million The two projects will be terminated in five years and the equipments wil be fully depreciated over five years using the straight-line method. The cost of capital for these projects is 10% and the relevant tax rate is 40%. (9 points) 22. You are considering two mutually exclusive investment projects with the following patterns of future cash flows: Initial cash outlay Annual revenues Annual operating expenses (excluding depreciation) Project A S3 million S5 million $2 million Project B S3 million S4 million S1.2 million The two projects will be terminated in five years and the equipments wil be fully depreciated over five years using the straight-line method. The cost of capital for these projects is 10% and the relevant tax rate is 40%. (9 points)