Leeds Council Planning and Estates Department is considering the expansion of the runway system at Leeds/Bradford international airport, which is now benefiting from a considerable increase in passenger transport following its increasing use by low-cost focussed airlines. The costs estimated for this new development are listed below: Land acquisition 250,000 Runway Construction 500,000 Extension to perimeter fence 40,000 Additional runway lighting 70,000 Annual maintenance costs 45,000 Increased revenue from landing fees 120,000 However, a new runway will require a large snowplough, costing 150,000. The existing one can be sold for 10,000. The new larger snowplough will add 15,000 per annum to the running costs. The Council estimates that the additional revenue from car-parking and business rate taxes will amount to 100,000 per annum. The Council views the profitability of projects on a ten- year horizon and has a hurdle rate for capital projects set at 12%. In order to make a decision on the expansion of the runway the Council requires the following advice from you on: a) The calculation of the relevant cash flows for the project 10% b) The calculation of the net present value (NPV) of the project 10% c) The calculation of the internal rate of return of the project 20% d) On the basis of your calculations, state whether or not the project should proceed and justify your decision 20%