1)Lloyds bank, which has a cost of capital of 12%, is considering an investment project with a life of five years that has the following characteristics.

Initial investment: 6,000,000

Sales price: 8.00 per unit

Variable costs: 4.85 per unit

Sales volume: 550,000 units per year

By how much would the initial investment have to change to make the NPV zero?

2) Amazon, a US-based company has a nominal cost of capital of 12% and the rate of inflation in the UK is 5%. Calculate the real cost of capital.