(c) Estimate the terminal-year net cash flow (year 5). (2 marks) (d) Calculate the NPV of the project and advise whether the project should be undertaken. (2 marks) (2+2+2+2 = 8 marks) QUESTION 4 VeganBites would like to produce a new range of vegan cheeses. They have spent $50,000 so far researching the idea. The equipment costs $250,000, and an additional $90,000 is needed to install it. Other information: Vegan Bites will have to increase the overdraft by $120,000 (at 15% pa interest) to fund it. Net working capital will be 20% of first year revenue. The equipment will be depreciated straight-line to zero over a 5-year life. Sales of the new cheese line is expected be $188,000 per year, and additional annual cash operating expenses of $83,000. The equipment will be sold for $100,000 after 5 years. The company tax rate is 30 per cent, and tax is paid in the year of income. The company's cost of capital is 8 per cent. REQUIRED: (a) Estimate the initial investment outlay of the project. (2 marks) (b) Estimate the annual after-tax operating cash flow of the project for year 1-4. (2 marks) BAFI1100 Final Examination, Semester 1 2022 5 RMIT Classification: Trusted (c) Estimate the terminal-year net cash flow (year 5). (2 marks) (d) Calculate the NPV of the project and advise whether the project should be undertaken. (2 marks) QUESTION 5 HealthyU has developed a fitness program. The company is comparing a local launch limited to Australia with an international launch covering the US, Italy and Australia. The Australia only launch will cost $100,000. The international approach will cost $300,000. Net cash flow estimates are as follows: Year Australia International 1 $47,000 $48,000 2 $50,000 $80,000 3 $50,000 $140,000 4 $58,000 $165,000 5 $180,000 The required rate of return is 20 per cent pa for both options. REQUIRED: (a) Calculate the NPV of each option. marks) (b) Should HealthyU limit the program to Australia or expand it to an international approach? Explain. (2 marks)