a) Use the following cash flows for i), ii) and iii). Assume cost of capital of 11%. 1) Calculate the standard payback period. If the cut-off payback period is 2.5 years, should you accept the project? Why or why not? (3 marks) ii) Calculate the net present value (NPV). Should you accept the project? Why or why not? ( 3 marks) iii) What is the definition of an internal return of return (IRR)? For the above cash flows, establish the equation where IRR is calculated from. If IRR=19.4\%, should you accept the project? Why or why not? ( 4 marks) b) FIN222 Ltd is considering replacing an existing production line with a new line that has a greater output capacity and operates with less labour than the existing line. Existing Production line - The old line was constructed 1 years ago for $600,000. It had an expected useful life of 6 years and an estimated market value of zero at the end of its life. - If you sell the old line now, it is expected to be sold for $400,000. New Production line - The new line would cost $1,200,000, has a 5 -year life and is expected to be sold for $300,000 at the end of its life. - Additional sales with the new machine are expected to result in additional net cash inflows of $400,000 per year. - The new line is however expected to have a negative impact on other side of the business and an annual operating cost of this side effect is expected to be $150,000 per year. - If FiN222 Ltd invests in the new line, a one-time investment of $360,000 in additional working capital will be required: The investment in working capital will be recovered in the terminal year: FiN222 Ltd's production Ines are depreciated using the straight-line method, the tax rate is 30% and the opportunity cost of capital is 10%. Calculate froe cash flows from Year 0 to Year 5.(10 marks)