ABC Enterprises is considering a new project with the following details:

• Initial Investment: USD 150,000
• Expected Life: 5 years
• Scrap Value: USD 10,000
• Depreciation Method: Reducing balance
• Discount Rate: 10%

Year-wise Cash Flows:

Year	Cash flow
1	40,000
2	45,000
3	50,000
4	55,000
5	60,000

a) Define incremental cash flows.

b) Discuss the importance of NPV in investment decision making.

c) Using the provided data, calculate: i) The depreciation expense for each year. ii) The NPV of the project. iii) The profitability index and interpret the result.