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QUESTION 4 Assume that, the company that you choose for Stock B, is planning to invest in four mutually exclusive investment projects; W, X, Y and Z, which have the following after-tax cash flows: Investment W X Y Z Cash Flow, per year ($) 0 1 2 3 4 (82,500) 49,000 39,000 29,000 19,000 (82,500) 0 0 0 86,000 (82,500) 26,500 26,800 16,500 16,600 (82,500) 21,500 21,500 21,500 21,500 Thereafter 450 450 450 450 Assume that the average return calculated in Question (1), is the expected return for the company; use it to answer the following questions. Ignore the negative sign if the answer that you calculated in Question (1) showed a negative figure: (a) Apply the present-value technique to assess the acceptability of each investment. (20 marks) (b) From the information given, which, if either, of the four investments would you recommend to the firm to choose? Explain your answer. (2 marks) QUESTION 4 Assume that, the company that you choose for Stock B, is planning to invest in four mutually exclusive investment projects; W, X, Y and Z, which have the following after-tax cash flows: Investment W X Y Z Cash Flow, per year ($) 0 1 2 3 4 (82,500) 49,000 39,000 29,000 19,000 (82,500) 0 0 0 86,000 (82,500) 26,500 26,800 16,500 16,600 (82,500) 21,500 21,500 21,500 21,500 Thereafter 450 450 450 450 Assume that the average return calculated in Question (1), is the expected return for the company; use it to answer the following questions. Ignore the negative sign if the answer that you calculated in Question (1) showed a negative figure: (a) Apply the present-value technique to assess the acceptability of each investment. (20 marks) (b) From the information given, which, if either, of the four investments would you recommend to the firm to choose? Explain your answer. (2 marks)