CORPORATE FINANCE QUESTION 4 (a) SUC Berhad has estimated the cash flows over the 5 year lives for two projects, A and B. These cash flows are summarized below. Cost of capital Initial Investment Year PROJECT A 10% RM40,000 Operating Cash Intlows RM10,000 12,000 14,000 16,000 10,000 PROJECTB 10% RM12,000 Operating Cash Inflows RM6,000 6,000 6,000 6,000 6,000 If project A is a replacement for project B and if the RM12.000 initial investment shown for project B is the after-tax cash inflows expected from liquidating it, would you recommend the company to implement this replacement plan? Justify your answer. (13 marks) (b) Many projects offer flexibility options that permit the firm to alter operations depending on how conditions change during the life of the project. Typically, either inputs or outputs for both) can be changed. Explain the TWO (2) types of flexibility options. (12 marks) [Total: 25 marks]