Please explain in detail

Question 1 A device captures 1waste heat from a nuclear reactor and allows it to be converted and sold as energy to nearby plants. The nuclear company has a remaining 2 years beiora it will be shut down. The initial cost of the device is E50,. resulting in 100,090 net revenue of energy one year later and 500. two years later. The nuclear company uses a high discount rate of 20% because it has limited borrowing capacity and has other productive uses for its cash. What is the NF'v" for installing this device? HINT: a discount rate of 20% means that the discount factor to multiply year 1 cash flow is 1.-'(1+t}.2] =1l'1.2 . Question 2 A hospital has obtained figures for the cost of installing energy-saving timer switchers to a lighting system. The NPV is positive. However, the firm's accountant has been shown the calculation. She notes that (a) no account has been taken of the fact that the use of timer switches will increase insurance costs due to added risk and (b) that no account has been taken of the internal management costs of the project though there is currently spare capacity in the management team to effect the change. Discuss whether either (a) or (b) or both might change the basis of the calculations. Question 3 ( adapted from Exam Paper 2016 Question 1) A Bank bought new trading software at a cost of $120,000 but it is now worth only $40,000 second hand. Net cash flows from continued use of this software are estimated at $25,000 for each of the remaining two years. An alternative and more advanced software could be installed for $60,000 i.e. $20,000 extra, after taking account of income from selling the old system. That option would give net cash flows of $25,000 in the first year and 40,000 in the second. So you have two choices - keep the old system or adopt the replacement one. The pace of software innovation mean that both systems will be worth nothing two years from now. Sketch (without calculation) the cash outflow and inflows for years 0,1,2 for each of the two competing options - keep the old system OR buy the new system. HINT. What is opportunity cost? Is the information on $120,000 relevant to the question? How much investment is the firm making by doing nothing i.e. just keeping the old system?Question 4 (a) List some variables that affect Net Present Value (NPV). (b) Explain the use of sensitivity analysis to check the effect of variation from plan of a single variable on a project NPV. (c) Explain how sensitivity analysis can be generalised to check the riskiness of NPV when several variables may simultaneously be varying from what was assumed in the plan. How would you present the results of (c) to an audience? [ Hint: graph] Note: part 4c of the 2018 exam question required an answer " on the use of sensitivity analysis in investment appraisal"