+ A. MC Trina Pty Ltd is investigating whether or not they should invest in a new technology. Fifty thousand dollars has already been paid to a consulting firm, who provided an initial project analysis, and no further preliminary consultation is required. If Trina Pty Ltd is to implement the project, they will require more space in their existing building. This required space is currently sublet and earns Trina Pty Ltd $100,000 rent revenue a year. Because Trina Pty Ltd needs to break the lease early it will have to pay $200,000 compensation to the existing tenant. The new technology will cost $5,000,000 for equipment and refitting ready for production. Trina will need to borrow 50% of the $5,000,000 required, at the interest rate of 2% p.a. Trina Pty Ltd has determined a cost of capital for the project of 15%. The following is the budgeted Income Statements for the project: Sales Trina Pty Ltd (New Technology Project) Proforma (Budgeted) Income Statements Years 1 to 10 Year 1 $1,000,000.00 Years 2-10 $3,500,000.00 $250,000.00 $375,000.00 $200,000.00 $100,000.00 $50,000.00 $50,000.00 $500,000.00 $500,000.00 $50,000.00 $50,000.00 $50,000.00 $1,100,000.00 $1,075,000.00 -$100,000.00 $2,425,000.00 . Less Expenses Production costs Marketing expenses Administration expenses Depreciation Interest expense Consultants fees (actual) Total Expenses Profit For purposes of undertaking a Net Present Value analysis, use the above information to choose the best answer for the following questions. 1. What is the net cash flow at year 1 (2 marks) A. -$100,000 B. $450,000 C. $400,000 D. $500,000 2. What is the total investment cost? (1 mark) A. $5,000,000 B. $5,050,000 C. $5,100,000 D. $5,200,000