It is your job as a financial analyst to decipher which information is relevant to the capital budgeting analysis. Upon completion, you will present your analysis to the Senior Managementwho will approve/declineinvestment in thenew planes.For Q1, Q2 and Q3,

Q1. The Cash Flows at the start.

Q2. The Cash Flows over the life.

Q3. The Cash Flows at the end.

For the following questions:

1) Due to the COVID pandemic and resulting travel restrictions, if the Skyliner planes were fully booked, total sales for Year 1 are expected to total $280 million. During the second and third years of operation, it is forecasted that total sales from the three Skyliner planes will be $600 million per annum (this is assuming the planes are fully booked). After Year 3, it is forecasted thatcompetitors likeAir America and Emiritz Airways will provide similar direct routes between Sydney and New York, as a result, total sales associated with the Skyliner planes will fall by $200 million to $400 million per annum (assuming the planes are fully booked). It is anticipated that on average that the Skyliner planes will be 80% filled during theentiretime they are operated.

2)Whilst the Skyliner planes are in operation, Yoohoo Airlines will incur lost sales on its existing routes: Sydney to Los Angeles to New York,and Sydney to San Francisco to New York. The annual lost sales on existing flights will amount to 15% of the actual annual sales earned by the Skyliner planes.

3) Yoohoo Airlines currently pays $500,000 p.a. to rent office space in Strathfield for its call centre. The annual salary for call centre staff at the Strathfield office totals $900,000. Yoohoo Airlines want to pitch the Skyliner planes asa more premium product, as a result, they will hire additional call centre staff and relocate their call centre to Ryde. The Ryde call centre will have annual salary costs of $1,000,000 and annual rent costs of $600,000.