CIn order to satisfy future growth opportunities. COL has asked Rachel Consulting Limited to conduct some market research. Rachel Consulting is being paid $25m as a fixed fee for her expert consulting services. Project A has an initial outlay of $150 million.

Project A will generate additional revenues of $45 million starting at the end of year 1 until the end of year 10. It will also incur additional working capital expenses of $1 million immediately, this working capital will be recovered at the end of the project. The operating costs will be 20% of the revenues from years 1 to 10. They will be depreciated on a straight line basis over ten years to zero book value. COL has estimated that some assets involved in the upgrades can be sold at the end of year 10 respectively for $25 million. The tax rate is 30%. All cash flows are annual and are received at the end of the year. The cost of capital for both projects is 6%

1. calculate the FCFs

2. calculate the NPV .

3. What is the discounted payback period?

4. What is the IRR?