B: CAPITAL INVESTMENT DECISIONS CASE STUDY MAGIC TIMBER AND STEEL: All the questions are based on the Magic Timber and Steel case study 1. Using an NPV analysis, advice Davidson as to whether or not Magic should purchase the new delta finishing machine. The company tax rate applicable to Magic is 30 percent. While Davidson has not calculated his own cost of capital, his colleague with a similar business about 200 kilometres away advises that his cost of capital is 11 percent. 2. Calculate the project internal rate of return (IRR). 3. Calculate the project payback period. 4. Are there other factors that have not been taken into account in the NPV/IRR analysis that might have an impact on your decision (i.e., quantitative and /or qualitative)? Identify these factors as bullet points along with a few sentences to explain their relevance. Would any of these factors change your answer to question 1? Answer yes or no, and include three or four sentences to explain your decision. 5. Conduct the following sensitivity analyses: Change the discount rate to 12 percent while all other variables remain same. Change the Year 5 selling price of the Delta to $80,000 while all other variables remain same. Change the maintenance cost for the Delta: Year 1 cost are $1,000, increasing by $1,000 each year while all other variables remain same. Change all the above factors together. 6. Based on your answers to questions 1, 2, 3 and 5, write a 500-word report to Davidson to present your recommendation