Lendrum Inc. is considering a new project whose data are shown below. The equipment has an economic life of 3 years, and is in CCA class 10 (30%). The half-year rule applies. Revenues and cash operating costs are expected to be constant over the projects 3-year life. What is the net operating cash flow for Year 1?

		Equipment cost		$80,000
		Annual sales revenues		$60,000
		Annual cash operating costs		$35,000
		Tax rate		25.0%
	a.	$21,750
	b.	$25,000
	c.	$13,000
	d.	$9,750

Strathcona Inc. uses a WACC of 6% for below-average risk projects, 8% for average risk projects, and 10% for above-average risk projects. Which independent project should Strathcona Inc. accept?

	a.	Without information about the projects NPVs we cannot determine which one(s) should be accepted.
	b.	Project C, which has above-average risk and an IRR of 11%
	c.	Project A, which has average risk and an IRR of 9%
	d.	Project B, which has below-average risk and an IRR of 5.5%