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Acacia Constructions is offered two contracts on the same day for building a new retirement village and a new library complex respectively. The contracts promise total net profits of $1,306,620 (Contract 1) and $2,155,860 (Contract 2), extending over 6 years and 9 years, respectively. Each will require investment of $1,400,000. Please answer the questions below. Where a number is required in the boxes below, please type in the number without a thousands separator. Average annual net profit from Contract 1: $ Average annual net profit from Contract 2: $ ARR for Contract 1 (round the number to the nearest two decimal places and separate the decimals from the rest of the number by a dot "."): % ARR for Contract 2 (round the number to the nearest two decimal places and separate the decimals from the rest of the number by a dot "."): % On the basis of ARR, the most profitable contract is: An improvement to the process in a children's shirt factory will cost $1,030,000, but will result in net cost savings of $270,000 annually for the next 5 years. Please answer the questions below. If a number is required, type the correct number in the boxes provided without a thousands separator. a. If funds are worth 6 per cent and the present value of an annuity of $1 per year for 5 years is equal to $4.2124, what is the NPV for the investment? NPV = $ Based on this scenario, are the process changes worth making? A b. If the process improvements turn out to cost $628,300, what is the NPV for the investment? NPV = $ Based on this second scenario, are the process changes worth making? > James Denning wants to buy a caravan rental business in the inner Melbourne suburb of Richmond. James spends $1,440,000 on the purchase of the business including caravans and further advertising and signage costs amount to $260,000. He thinks he can net $210,000 each year after all costs are paid. He will work in the business and not take a salary. After 9 years of this venture, he aims to sell the business and the caravans. To be conservative, he allows only $160,000 as the amount recouped. Please answers the questions below. Where a number is required in the boxes below, please type in the number without a thousands separator. a. What is the PP for the caravan venture? PP (round the number to the nearest two decimal places and separate the decimals from the rest of the number by a dot ".") = years b. If James allows $50,000 as his own wage in his calculations and he could earn 10 per cent elsewhere on his funds, what is the NPV for the project? Please note that based on the discount rate of 10 per cent, the present value of an annuity of $1 per year for 9 years is $5.759, while the present value of $1 in 9 years is $0.4241. NPV = $
