4) Capital budgeting decision on new branch Initial cost of building and equipment is $1 million Expected to have a useful life of 20 years At the end of the project the building and its equipment are expected to be sold for a s200,000 salvage value The building and its equipment will be depreciated over their 20-year life using straight- line depreciation to a zero balance The building is to be constructed on land leased for S22,000 per year Net working capital must be increased by S100,000 Annual revenues from the new branch will be $400,000 Of this S400,000 in revenues, $50,000 will be drawn away from the bank's main office The new branch will incur about S130,000 per year in other expenses Both expenses and revenues are expected to remain approximately constant over the branch's 20-year life Marginal tax rate is 40% Cost of capital 9% Answer the following questions 1. What is the cash flow for the branch's 20-year life 2. Calculate the NPv, Profitability index, and Internal rate of return (IRR). 3. Should the project be accepted? Why