Kindly answer the following questions;

1a)

Why should projects that display a positive net present value when calculated at the

company's (opportunity) cost of capital add to the current value of shareholders'

wealth?

b) A project costs 1.5 million, and is expected to bring in a net cashflow of 500,000

each year for the next 4 years. If the discount rate is 10%, is this project worth doing?

2)

Laing the information given below, draw up LoadsaMoney's cashflow statement for 2015 and comment on the cash movements and the final cash position. During 2015, LoadsaMoney had the following items of income and expenditures E increase in stocks of finished goods 13.500 stall cost 47.300 income from WaddsaCash dividends 4.200 Tumover 362.000 Lax paid 49,120 increme in cash 23.780 dividends paid 15.000 increase in work-in-progress 2,100 interest received on 3-month bank deposit 3500 intenst paid on loan stock 5.500 2015 sales for which payment not yet received 71,000 payments for 2014 sales received in 2015 63,000 2015 raw material purchases not yet paid for 37.000 2014 purchases paid for in 2015 407140 The company bought 3 bank note printing machines in January 2015 for (35000 each. The total depreciation charge for 2015 was $22,450. On 1 January 2015, the company had $50,000 in cash and (98,000 in a three-month bank deposit. By 31 December 2015, it had a $73,780 in cash and 195,0100 in three- month bank deposit. LoadsaMoney's operating profit for 2015 was $191,250