Financial Management B (AMF3872) Assignment 1 2020 Question 1 (20 marks) Oshakati Motors is considering buying a new equipment with an initial investment value of N$350 000. The equipment has a 5-year life and no residual value at the end of the five years. There are many uncertainties in the industry and, therefore, the company has estimated cash inflows for three different scenarios: pessimistic, most likely and optimistic. The following table lists the company's cost of capital is 10.5%, and expected cash flows. Expected cash flows Year 2 3 4 5 Pessimistic (N$) 55 000 400 00 56 200 36 800 29 500 Most likely(N$) 68 000 58 700 78 500 72 500 42 260 Optimistic(N$) 85 600 76 300 125 200 114 420 91 100 Required: a) Calculate the NPV for each given scenario. (18 marks) b) Should Oshakati Motors make this investment? Why or why not? (2marks)