Please find attached question, Th picture from laptop is the example of how you answer the questio.

MAA261 Week 10_Student version - Protected Vien - Saved to this PC DEEPANSHU BAGGA DB Draw Design Transitions Animations Slide Show Review View Help Search Share Comments eful-files from the internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View. Enable Editing ELCC LTD Statement of Cash flows for the year ended 30 June Y2 Example: $'000 $'000 Cash flows from operating activities Direct Method format Receipts from customers 30,330 Different presentation for operating cash Payments to suppliers and employees 27.600) flows for the direct method but same Cash generated from operations 2.730 final figure per the indirect method. Interest paid (270) Income taxes paid (900) The direct method presents a summary Net cash flow from operating activities 1,560 of the major categories of operating cash Cash flows from investing activities in and out flows that can be traced to Purchase of property, plant, and equipment (900) cash records. Proceeds from sale of equipment 20 Interest received 100 Dividends received 300 Net cash flows from investing activities 480) Cash flows from financing activities Same formatting for investing and Proceeds from share issue 250 Proceeds from long-term borrowings 250 financing cash flows under the direct and Dividends paid (1,290) indirect method Net cash flows from financing activities (790) Net increase in cash flows 290 Cash; 1 July Yr2 (opening balance) 230 DEAKIN Cash: 30 June Yr2 (closing balance) BUSINESS 520 AACSB SCHOOL + 96 0 6:23 PM 07-Sep-20PART B-Capital Budgeting East West Bearings Ltd wants to expand its operations in Geelong. Considering the competitive environment and macro uncertainty, East West wants to make sure that they should invest professionally so that they would not suffer either on account of profits or on account of cash flows on any project. As the sales are growing consistently, to meet the projected sales, East West wants to set up a new plant to manufacture bearings. In this regard, the director of East West approaches you for your suggestions on their capital budgeting decision to set up a new bearings manufacturing plant. The initial investment includes cash outlays for plant of $2 million, for equipment of $700,000, and for working capital of $300,000. Working capital will be deployed at initial stage and will be released at the end of the project. Project once started its cash revenue is projected worth $1.1 million for each of the 10 years of the project. Fixed cash expenses for this plant are $250,000 for each year. Variable cash expenses are $350,000 for first eight years of the operation, then in year 9 and 10 these become $360,000 for each of these years. East West sells 50,000 bearings every year, starting from year 1 to year 10. Each bearing is sold for a price of $22 in all 10 operational years. Plant will be depreciated on a straight-line basis for 10 years. Equipment will be depreciated at a rate of $70,000 per annum for 10 years of operation. Corporate tax is levied at the rate of 30% per annum. At the expiry of 10 years, plant carries market value of $800,000 and is sold at this price while equipment is sold for $100,000. Working capital will be released at the expiry date. East West Bearings has a company policy to use 7% as the hurdle rate for all expansion investment opportunities. The hurdle rate is based on the study of the company's cost of capital conducted 3 years ago. a . Prepare cash flow statement/s and compute the NPV and IRR of the proposed project. Comment on the feasibility of the project. (30 marks) The director of East West Bearings forgot to mention one important expenditure which their company has incurred in relation to the establishment of this new plant. This expenditure has taken Page 9 of 10