MyCarCorp produces car parts and is considering opening a new factory in Russia (assume now is beginning of 2002 and the factory would open in 2003). Factory will re- quire an initial investment of 30m. The firm spent 500,000 on a bribe 2001 and has committed to pay another 500,000 in 2002 as a delayed compensation. The firm typically uses a discount rate of 8%, based on risk level. Assume tax rate is 0%. -1 0 1 2 3 Year Bribes 2001 2002 2003 2004 2005 -0.5 -0.5 0 0 0 Initial Investment 0 -30 0 0 0 Project Revenue 0 0 60 50 50 Operating Expenses (excl. depreciation) Depreciation 0 0 -40 -40 -40 0 0 10 10 10 Questions: 1) Calculate the net present value (NPV) of the project 2) Should the firm undertake the project? 3) What is the IRR of the project? 4) What is the payback period?