(bi) If a project is financed by a $50m bond with 5% annual coupon, then the financing cost should be deducted from the projects cash flows when calculating the NPV of the project. Is the statement true or false? Briefly explain. (6 marks)

(bii) Determine if the following statements are true or false.

1. 1) If the (depreciable) asset is fully-depreciated at the end of the project, the firm will

   receive pre-tax price for the sale of the asset. (3 marks)

2. 2) To determine the contribution of the sale of an asset to the projects NPV, the present

   value of an annuity formula should be used. (3 marks)