In addition to the cash flow information, you have also been provided with the following details: - The corporate tax rate is 30%; - Tax is paid on profits at the end of the year in which it is earned; - Both investment opportunities are considered as risky as the company; - Cooper Technologies Ltd currently has a beta of 1.25; - The risk-free rate is 6% p.a.; and, - The expected return on the market is 11% p.a. governments, states, provinces, counties, municipalities, and commercial organisations around the world. The company's geospatial services encompass the acquisition, analysis, integration, visualisation and management of geospatial data. To boost their competitive advantage against peer firms in the area of geospatial data acquisition, Cooper Technologies Ltd has decided to launch a new Earth observation satellite. After carefully considering sale proposals from a number of well-known aerospace companies, Cooper Technologies Ltd has narrowed their choice to two nextgeneration imaging satellites: RD-6 manufactured by Davis Group Ltd and MK-8 by Koshiba Aerospace Ltd. Both satellites are regarded as suitable to complete the required job. As the financial comptroller of Cooper Technologies Ltd, you have been requested by the management board to advise which one of the two satellites the company should purchase. The cost of a single RD-6 satellite is $390 million. A MK-8 imaging satellite carries a price tag of $330 million. Another significant factor with satellites is the cost of the launch. In particular, launching a single RD-6 satellite into space is expected to cost the company $110 million. Due to its heavier weight, launching a MK-8 satellite warrants a heavy-lift launch vehicle instead of a medium-lift launch vehicle used in the case of a RD-6 satellite launch. As a result, the cost of a MK-8 satellite launch is estimated to be $175 million. Both satellites are to be depreciated straight line down to a book value of zero over their entire useful life. Further details of each satellite's governments, states, provinces, counties, municipalities, and commercial organisations around the world. The company's geospatial services encompass the acquisition, analysis, integration, visualisation and management of geospatial data. To boost their competitive advantage against peer firms in the area of geospatial data acquisition, Cooper Technologies Ltd has decided to launch a new Earth observation satellite. After carefully considering sale proposals from a number of well-known aerospace companies, Cooper Technologies Ltd has narrowed their choice to two nextgeneration imaging satellites: RD-6 manufactured by Davis Group Ltd and MK-8 by Koshiba Aerospace Ltd. Both satellites are regarded as suitable to complete the required job. As the financial comptroller of Cooper Technologies Ltd, you have been requested by the management board to advise which one of the two satellites the company should purchase. The cost of a single RD-6 satellite is $390 million. A MK-8 imaging satellite carries a price tag of $330 million. Another significant factor with satellites is the cost of the launch. In particular, launching a single RD-6 satellite into space is expected to cost the company $110 million. Due to its heavier weight, launching a MK-8 satellite warrants a heavy-lift launch vehicle instead of a medium-lift launch vehicle used in the case of a RD-6 satellite launch. As a result, the cost of a MK-8 satellite launch is estimated to be $175 million. Both satellites are to be depreciated straight line down to a book value of zero over their entire useful life. Further details of each satellite's Calculate the required rate of return for each investment opportunity. Question 2 (5 marks) Calculate the net present value (NPV) for RD-6 satellite. Question 3 (5 marks) Calculate the NPV for MK-8 satellite. Question 4 (7 marks) Based on the equivalent annual cash flow, which satellite, if any, do you recommend Cooper Technologies Ltd to proceed with? Question 5 (4 marks) a. Calculate the internal rate of return (IRR) for each satellite. (2 marks) b. Based on your IRR calculations, identify which, if any, of the satellites you would recommend that Cooper Technologies Ltd purchase: 1. If the projects are independent ( 1 mark) 2. If the projects are mutually exclusive ( 1 mark) Question 6 (7 marks) a. Calculate the payback period and discounted payback period for RD-6 satellite. ( 2 marks) b. Calculate the payback period and discounted payback period for MK-8 satellite. (2 marks) c. Identify which satellite the company would invest based on the discounted payback period, assuming the projects are mutually exclusive. (1 mark) d. Discuss one limitation that both payback period and discounted payback period have in common. (1 mark) e. Discuss one advantage of discounted payback period over payback period. ( 1 mark) In addition to the cash flow information, you have also been provided with the following details: - The corporate tax rate is 30%; - Tax is paid on profits at the end of the year in which it is earned; - Both investment opportunities are considered as risky as the company; - Cooper Technologies Ltd currently has a beta of 1.25; - The risk-free rate is 6% p.a.; and, - The expected return on the market is 11% p.a. governments, states, provinces, counties, municipalities, and commercial organisations around the world. The company's geospatial services encompass the acquisition, analysis, integration, visualisation and management of geospatial data. To boost their competitive advantage against peer firms in the area of geospatial data acquisition, Cooper Technologies Ltd has decided to launch a new Earth observation satellite. After carefully considering sale proposals from a number of well-known aerospace companies, Cooper Technologies Ltd has narrowed their choice to two nextgeneration imaging satellites: RD-6 manufactured by Davis Group Ltd and MK-8 by Koshiba Aerospace Ltd. Both satellites are regarded as suitable to complete the required job. As the financial comptroller of Cooper Technologies Ltd, you have been requested by the management board to advise which one of the two satellites the company should purchase. The cost of a single RD-6 satellite is $390 million. A MK-8 imaging satellite carries a price tag of $330 million. Another significant factor with satellites is the cost of the launch. In particular, launching a single RD-6 satellite into space is expected to cost the company $110 million. Due to its heavier weight, launching a MK-8 satellite warrants a heavy-lift launch vehicle instead of a medium-lift launch vehicle used in the case of a RD-6 satellite launch. As a result, the cost of a MK-8 satellite launch is estimated to be $175 million. Both satellites are to be depreciated straight line down to a book value of zero over their entire useful life. Further details of each satellite's governments, states, provinces, counties, municipalities, and commercial organisations around the world. The company's geospatial services encompass the acquisition, analysis, integration, visualisation and management of geospatial data. To boost their competitive advantage against peer firms in the area of geospatial data acquisition, Cooper Technologies Ltd has decided to launch a new Earth observation satellite. After carefully considering sale proposals from a number of well-known aerospace companies, Cooper Technologies Ltd has narrowed their choice to two nextgeneration imaging satellites: RD-6 manufactured by Davis Group Ltd and MK-8 by Koshiba Aerospace Ltd. Both satellites are regarded as suitable to complete the required job. As the financial comptroller of Cooper Technologies Ltd, you have been requested by the management board to advise which one of the two satellites the company should purchase. The cost of a single RD-6 satellite is $390 million. A MK-8 imaging satellite carries a price tag of $330 million. Another significant factor with satellites is the cost of the launch. In particular, launching a single RD-6 satellite into space is expected to cost the company $110 million. Due to its heavier weight, launching a MK-8 satellite warrants a heavy-lift launch vehicle instead of a medium-lift launch vehicle used in the case of a RD-6 satellite launch. As a result, the cost of a MK-8 satellite launch is estimated to be $175 million. Both satellites are to be depreciated straight line down to a book value of zero over their entire useful life. Further details of each satellite's Calculate the required rate of return for each investment opportunity. Question 2 (5 marks) Calculate the net present value (NPV) for RD-6 satellite. Question 3 (5 marks) Calculate the NPV for MK-8 satellite. Question 4 (7 marks) Based on the equivalent annual cash flow, which satellite, if any, do you recommend Cooper Technologies Ltd to proceed with? Question 5 (4 marks) a. Calculate the internal rate of return (IRR) for each satellite. (2 marks) b. Based on your IRR calculations, identify which, if any, of the satellites you would recommend that Cooper Technologies Ltd purchase: 1. If the projects are independent ( 1 mark) 2. If the projects are mutually exclusive ( 1 mark) Question 6 (7 marks) a. Calculate the payback period and discounted payback period for RD-6 satellite. ( 2 marks) b. Calculate the payback period and discounted payback period for MK-8 satellite. (2 marks) c. Identify which satellite the company would invest based on the discounted payback period, assuming the projects are mutually exclusive. (1 mark) d. Discuss one limitation that both payback period and discounted payback period have in common. (1 mark) e. Discuss one advantage of discounted payback period over payback period. ( 1 mark)