Global Textiles is assessing the purchase of a new weaving machine. The details are:

• Cost of Machine: USD 350,000
• Expected Life: 7 years
• Salvage Value: USD 50,000
• Depreciation Method: Straight Line
• Cost of Capital: 13%

Projected cash flows:

Year	Cash Flow	Profit
1	60,000	10,000
2	70,000	20,000
3	80,000	30,000
4	90,000	40,000
5	100,000	50,000
6	110,000	60,000
7	120,000	70,000

Requirements:

a. Discuss the role of risk analysis in capital budgeting. b. Explain the concept of the modified internal rate of return (MIRR). c. Using the provided data:

• Calculate the payback period.
• Determine the NPV.
• Compute the IRR and MIRR.
• Evaluate the profitability index.