1. What do we mean by "Relevant Cash Flows" of a project? And why we should apply "stand-alone principle" in making capital investment decisions? (10 points out of 100) In 2015, BonTerra Resources Inc. had sales of 7.5 million dollars, costs of 3.2 million dollars, depreciation of $950000, and a 30% tax rate. What is the operating cash flow of BonTerra in 2015? (10 points out of 100) 3. BonTerra Resources Inc. wants to purchase a new tunnel boringachie (TBM). There are three options, with the following information The discount rate is 12%. (20 points out of 100) OptionsUseful Life (vears) TBM A TBM B TBM C Initial Cost 1.2 million dollars 4.0 million dollars 1.9 million dollars Annual Maintenance Cost $60,000 $80,000 $70,000 Salvage Value $200,000 $500,000 $300,000 a) b) Using EAC criteria, which one BonTerra should buy? If BonTerra needs the TBM machine for 6 years, what is the best purchasing policy? (Note that, a TBM machine should be replaced with new one after its useful life.) 4. What is the "Average Accounting Return" of following investment?(10 points out of 100) Life: 4 years Required capital: $150500 Before tax annual cash inflow: $35500 Tax Rate: 30% Depreciation method: straight-line