1. A firm has undertaken a feasibility study to evaluateaproject that has the following estimated cashflows:

• Increased sales to business of $140,000 for the next 5 years (starting in one year's time)
• Increased costs of $20,000 forthe nexttwo years (startingin one year's time)
• The initial capital expenditure requiredis $100,000.
• The study cost $10,000 to conduct.
• -Amount borrowed to fund project is $200,000 with interest of 8% pa paid yearly.
• If the firm is facing a discount rate of 10%, what is the NPV of this project?

1. $516,155
2. $506,155
3. $395,999
4. $455,420

2.Tank Ltd is considering undertaking the purchase of a new piece of equipment that is expected to increase revenue by $12,000 each year for six years. The equipment will increase costs $4,000 each year for six years. It costs $32,000 to purchase today and for tax purposes must be depreciated down to zero over its 8 year useful life using the straight-line method. If Tank is actually forecasting a salvage (for capital budgeting purposes) of $5,000 after 6 years, what is the machine's net cash flow (after tax) for year 6? Assume the tax rate is 30%.

1. 13,000
2. 11,800
3. 12,700
4. 12,400

3.A project which has an initial cost of $9,191 will generate the following net cash flows at the end of each year:

Year 1: +$4,000

Year 2: +$3,000

Year 3: +$2,000

Year 4: +$2,000

It is known that this project has a positive NPV at the company's cost of capital of 8%. Which of the following is closest to the IRR on this project?

1. 8.6%
2. 8.8%
3. 7.8%
4. 7.6%