Harrys Holiday Inn, a roadside motel, is considering building a kitchen/dining room to serve breakfast to overnight guests. See the relevant information below. Note that k is an abbreviation for kilo. So $1k is $1,000. The unit sales is measured in breakfasts served.

Dining Room Project Data
Project life	10 years
Construction of kitchen and dining room	$810k
Depreciation of kitchen equipment	See Note 4.
Unit sales at end of each year	70k
Sale price per unit	$10
Variable cost per unit	$6
Kitchen staff salary pa, paid in arrears	$10k
Annual kitchen maintenance costs	$20k
Required return on assets (WACC before tax)	8% pa
Tax rate	30%

Note 1: The owner paid consultants fees of $60k to devise a business plan. Market research has also been undertaken at a cost of $5k to determine the forecast unit sales and price. Both of these costs are tax deductible.

Note 2: An initial (t=0) $30k investment into plates, serving bowls and cutlery (current assets) is required. These current assets will be used up and replaced at the end of each year. These current assets (CA) are expensed in the variable cost per unit at the end of each year, but the investment in these CA happens at the start of each year.

Note 3: The owner expects this new service to attract new guests and thus increase room bookings. The expected increase in accommodation revenue is expected to be $150k per year.

Note 4: The kitchen equipment is expected to last for 10 years with regular maintenance. However, the Tax Office only allows the equipment to be depreciated straight line to zero over 9 years.

Note 5: The kitchen equipment can be sold to a competitor at time t=10 for $65,000

Note 6: The project will be financed entirely by equity.

Provide all answers in thousands of dollars, with final answers rounded to 2 decimal places.

It is not necessary to show any working. Writing the correct answer alone will score full marks. However, if you make a mistake, you will score poorly. Writing the working may allow you to score partial marks even if your final answer is wrong.

Question 5a (2 marks): Find the projects Firm Free Cash Flow (FFCF) at time t = 0.

Question 5b (3 marks): Find the projects FFCF at time t=1

Question 5c (4 marks): Find the projects FFCF at time t=10

Question 5d (3 marks): Find the NPV of the Dining Room project