4.) Phil Carter, President of Carter Computer Components Corp. has the option of shipping computer transformers from its Singapore plant via container ship or airfreight. The typical shipment has a value of $75,000. A container ship takes 24 days and costs $5,000; airfreight takes 1 day and costs $8,000. Holding cost is estimated to be 40% or $82.19 per day in either case. How should shipments be made and why?

5.) Project X is estimated to generate cash flows of $40,000 per year for 10 years. The cost of the project is $226,009. Project X is expected to improve the competitiveness of the company as leader in the industry. It is the policy of the company to approve only capital investment with payback of five years or lower and IRR of at least 13%.

a. What is the internal rate of return for this project?

b. What is the payback period in years?

c. Should the project be approved and why?