Air Australia is considering beginning a route from Brisbane to New York: This will require the purchase of a new Airbus A350 Long Range aircraft that will cost $350 Million. The aircraft will have a useful life of 30 years and will depreciate to 0 on a straight-line basis over its useful life. The company predicts it will be able to sell the aircraft for scrap for the value of $1 million. The aircraft will fly return from Brisbane to New York 3 times a week and each time will generate revenue of $500000 for the round trip. Fuel costs, parking, labour and other costs will amount to $100000 per each round trip. The net working capital of $10 million is needed at the beginning of the project and can be recovered fully at the end of year 30. By going ahead with this project the company will have to cancel its current Brisbane to Tokyo route which currently brings in $200000 in revenue and costs $80000 per trip. It currently flies twice a week. The business is in the 30% tax bracket, and has a cost of capital of 10% per annum. A. What are the annual Free Cash Flows for the business? (10 marks) B. What is the NPV of this project? Should the firm expand? (5 marks) C. If you require a payback period of less than 14 years, would you go ahead with this project? What is the major disadvantage of the payback period metric? (5 marks) Air Australia is considering beginning a route from Brisbane to New York: This will require the purchase of a new Airbus A350 Long Range aircraft that will cost $350 Million. The aircraft will have a useful life of 30 years and will depreciate to 0 on a straight-line basis over its useful life. The company predicts it will be able to sell the aircraft for scrap for the value of $1 million. The aircraft will fly return from Brisbane to New York 3 times a week and each time will generate revenue of $500000 for the round trip. Fuel costs, parking, labour and other costs will amount to $100000 per each round trip. The net working capital of $10 million is needed at the beginning of the project and can be recovered fully at the end of year 30. By going ahead with this project the company will have to cancel its current Brisbane to Tokyo route which currently brings in $200000 in revenue and costs $80000 per trip. It currently flies twice a week. The business is in the 30% tax bracket, and has a cost of capital of 10% per annum. A. What are the annual Free Cash Flows for the business? (10 marks) B. What is the NPV of this project? Should the firm expand? (5 marks) C. If you require a payback period of less than 14 years, would you go ahead with this project? What is the major disadvantage of the payback period metric