Question 05 i. After discovering a new gold vein in the Seethawaka Mountain, Colombo Mining Company (CMC) must decide whether to mine the deposit. The most cost-effective method of mining gold is sulfuric acid extraction, a process that results in environmental damage. To go ahead with the extraction, CMC must spend Rs. 900,000 for new mining equipment and pay Rs. 165,000 for its installation. The gold mined will net the firm an estimated Rs. 350,000 each year over the next 5-year life 2 ii. of the vein. CMC's cost of capital is 14%. Assume that the cash inflows occur at the end of each year. a. What are the NPV and IRR of this project? b. Should this project be undertaken, ignoring environmental concerns? (10 Marks) Define each of the following terms: a. Net working capital and net operating working capital. b. Relaxed working capital financing policy and restricted working capital financing policy. (05 Marks) A large retailer obtains merchandise under the credit terms of 1/15, net 45, net 45, but routinely takes 60 days to pay its bills. Given that the retailer is an important customer, suppliers allow the firm to stretch its credit terms. What is the retailer's effective cost of trade credit? (05 Marks)