Purpose: A firm will use its cost of capital as discount rate for decisions on allocation of capital through various projects. This assignment is to make capital budgeting decisions based on a number of investment decisions tools. Instructions: 1. Use the scenario below to answer the questions. 2. You can use the BA II Plus 3. Submit your report in MS Word format using the BA II Plus calculator and show your calculations. Air Alberta is considering replacing the firm's regional jets with a new model, which has a total purchase price of $15 million. The new jets will generate additional revenue of $3.5 million per year for the 20 years of the useful life of the jets. Expected added operational costs of the jets are 25% of revenues. Air Alberta expects to use the new jets for 20 years, at which time, they would be replaced The company estimates that all the new planes could be sold for a total of $4.7 million (salvage value). The new regional jets have a CCA rate of 25%(d=0.25). Air Alberta has a corporate tax rate of 35%. The purchase would require a $2,000,000 increase in net working capital which would be returned to Air Alberta when it sells the jets after 20 years. Required: Using a discount rate of 15%, calculate the NPV of the new jet purchase. Prepare a short memo and discuss your recommendation on the purchase of the regional jets