3. Year Cash flow () 0 - Investment - ? 150,000 1 2 150,000 3 150,000 4 ? Some years ago X AG paid 15'000 for a vacant lot with planning permission. The plot could easily be sold today for 10 times that amount. X AG has however a project in mind that would occupy the plot and require investment of 200,000 but generate positive cash flows of 150,000 for the next 4 years. X AG will be able to sell the plot for 100'000 at the conclusion of the project. a) Calculate the relevant cash flows for years 1 through 4 and the appropriate initial investment value. b) For the cash flows calculated above, suppose the firm uses the NPV decision rule. At a required return of 7 per cent, should the firm accept this project? c) What if the required return was 15 percent? d) What is the Cash Payback Period ? Should the firm accept if projects are required to payback within 2 years? e) Calculate the PI ratio at 7 and 15 percent