answer attached questions

Question 4 (Total marks =15) Question 5 [8 marks] (a) Skyline Corp uses a process of capital rationing in its decision making. The firm's Using the net present values (NPVs) and associated probabilities for projects X and Y cost of capital is 12 percent. It will invest only N$80,000 this year. It has summarized in the table below. determined the internal rate of return for each of the following projects. NPVS (N$) Project X Project Y Probability NPVS(N$) Probability -15,000 0.01 -20,000 0.00 Project Project Size Percent of Internal rate of Return 0 0.03 -10,000 0.02 ITMOOND $15,000 14% 15,000 0.03 0 0.04 25,000 19 25,000 0.05 10,000 0.06 30,000 10 30,000 0.15 20,000 0.08 25,000 16.5 35,000 0.50 30,00 0.15 20,000 40,000 0.15 0.35 21 45,00 40,000 0.05 50.000 0.20 15,000 11 55,000 0.03 60,000 0.05 25,000 18 70,000 0.00 70,000 0.03 10,000 17.5 80,00 0.01 Pick out the projects that the firm should accept and explain why. (4 marks) 90,000 0.01 What is the sign of the NPVs of projects C and F at the cost of capital? (1 100,000 0.00 marks) (i). Calculate the expected NPV for each project. (2 marks) (b) Aerospace Dynamics will invest N$110,000 in a project that will produce the (ii). Calculate the standard deviation for each project (4 marks) following cash flows. The cost of capital is 11 percent. (Note that the fourth year's (iii). Calculate the coefficient of variation of the possible NPVs.(2 marks) cash flow is negative) Year Cash Flow GOOD LUCK 1 CI A W N $36,000 $44,000 $38,000 ($44,000) $81,000 (i). Calculate the Discounted payback period of the project (2 marks) (ii). Use the Net present value (NPV) to evaluate if the project should be undertaken. (2 marks) (iii). Use the Profitability index (PI) to evaluate if the project should be undertaken. (2 marks) (iv). use the Modified internal rate of return (MIRR) to evaluate if the project should be undertaken. (4 marks) 2 w