Q2. The directors of Foresight Industries are currently considering launching a new product. The production of the new product involves the purchase of new machinery. The following information is available for the project: Probabilities Profit Year 1 Profit Year 2 Profit Year 3 Cost (Immediate Outlay) 120,000 Residual/Scrap Value Product 1 0.3 35,000 56,000 E110,000 140,000 52,500 84,000 165,000 210,000 47,250 75,600 148,500 189,000 0.15 0.4 0.15 25,000 The company has an estimated cost of capital of 10% and employs the straight-line method of depreciation for all fixed assets when calculating net profit. Neither project would increase the working capital of the company. The company has sufficient funds to meet all capital expenditure requirements. Required: a) Calculate the expected profit for each year of the life of product 1 (9 marks) b) Calculate for product 1: i) The net present value ii) The payback period (10 marks) (6 marks)