Q2. St Lawrence Bus Lines is offered a contract for busing schoolchildren that will produce an annual profit of $70,000 for 7 years. To fulfill the contract, St Lawrence Bus Lines would have to buy buses at a total cost of $433,000. At the end of the contract, the resale value of the buses will be $80,000. Using NPV, decide if St Lawrence Bus Lines should sign the contract if the cost of capital is

1. 4.45% p.a . b) 9.75 % p.a. (3 marks)

3. Find the IRR (Internal Rate of Return) , correct to two decimal places.

a)

b)

c)IRR=