An entrepreneur is analyzing a commercial project that will operate for 4 years, at the end of which he hopes to sell the business to another investor. The initial investments that the project needs are the following: Machines for $ 100,000, with an economic useful life of 4 years and scrap value of $ 28,000 at the end of those 4 years. Its normal tax useful life is 15 years. Furniture for $ 22,000, with an economic useful life of 2 years and a scrap value of $ 3,500 at the end of those 2 years. Its normal tax useful life is 7 years. Organization and start-up expenses of $ 11,000. It includes: legal expenses for $ 4,000, salaries before the operation for $ 5,000 and the hiring of a study for the formulation and evaluation of projects for $ 2,000. Cash for $ 4,500, as a permanent necessity to operate the business. Additionally, at the end of year 2, the Furniture must be renewed, an investment with the same characteristics and the amount of the investment from year zero. With respect to accounts receivable, it is estimated that at the end of each year there will be an amount equivalent to 1.5 months of sales for the following year. It is believed that at the end of the 4 years, the accounts receivable could be sold for 65% of their cost. Investments in Merchandise are not required given the perishability of the products to be sold. Based on market research, the project will generate revenues of $ 86,000 in year 1, $ 86,000 in year 2, $ 100,000 in year 3, and $ 120,000 in year 4. Fixed out-of-pocket expenses are estimated to be $ 25,000 per year, while cost of sales is estimated as 37% of sales. To determine the profitability to be demanded by the owners of the project, a study has been carried out, which yielded the following results: The beta of the project, based on the price movements of shares of companies with similar items, has been estimated at 1.58. This beta is deleveraged, that is, debt free. The market portfolio, represented by the IPSA, presents an annual return of 9.8% on average in the last 8 years. The interest rate corresponding to the nominal papers of the Central Bank (in pesos) is 5.6% per annum as an average of the last 8 years. Inflation is 3.4% annual average for the last 8 years. REQUESTED: Considering that the owner wishes to use accelerated depreciation and amortization for tax purposes and that the income tax rate will be 27%:

a) Determine the rate of cost of own capital.

b) Determine the NPV of the Pure Project, assuming that at the end of the 4 years the owner of the project sells the business to another investor. To do this, consider that from year 5 onwards the volume of business operations will be equal to year 4 for many years.

c) Determine the NPV of the Financed Project. For this, take into account that a bank loan equivalent to 40% of the initial investment in fixed assets will be requested. This debt will be paid in 3 equal annual installments of amortization and interest, starting at the end of year 1 and will have an interest rate of 5.7%.