a) You make a mistake in estimating the NPV of a project. You have discounted the net income rather than the cash flows to the project. Would you expect the NPV that you have calculated to be higher or lower than the NPV using cash flows? Explain why there is a difference. [5marks] b) If a firm is said to have very high operational gearing, what does this mean and how might a company lower its operational gearing? [5 marks] c) Discuss the attractions of APV to companies compared to NPV based on WACC. Give at least two examples of case where companies might make use of the APV technique. [10 marks] [Total 20 marks]