Bell Co has decentralised and divisional managers are allowed to make their own investment decisions subject to confirmation by the main company board.Because each of the three divisions (Ding, Dong and Merrily) are subject to different levels of risk, it has been thought appropriate to use different discount rates in each division. Ding has been told that its real discount rate is 5%.The general rate of inflation, based on an index that uses a very wide range of prices, is 2%.In the industry in which Ding operates, a number of prices are seen to be inflating at 3%. Dong is assessing a project in which the first of four annual lease payments has been agreed at $120,000.This is payable in one year's time and subsequent payments will rise by 4% per year.Dong's proper money cost of capital is 8%. Merrily is considering investing $1,000,000 in a project, which will produce the following annual outflows and inflows. Year 1 2 3 Outflows ($000) 1,800 2,500 1,500 Inflows ($000) 2,000 3,000 2,000 The cash flows, which arise at the end of each year, are stated in current year terms.It is expected that outflows will rise by 3% per year and inflows by 2% per year.The money cost of capital of the Merrily Division is 9%. 

(a) What is Ding's money discount rate? 

(b) What is the present value of Dong's last payment that will be made in four years' time (to the nearest $000)?

(c) What is the net present value of Merrily's project (to the nearest $000)?