Question 1 (25 marks) YNI Ltd. is considering investing in a 2-year project which is expected to generate the following year-end after-tax cash flows: C1 = $40 million, C2 = $140 million. The yearly discount rate for the project is 8%. The initial cost of the project is $160 million. (a) Compute the profit and NPV of the project. (5 marks) (b) Based on the answer of part (a), should the project be accepted? Explain. (3 marks) (c) YNI's cut-off period is 1.9 years. Compute the Payback period of the project. Should YNI accept the project? (3 marks) (d) Compute the PI of the project. According to the rule, should YNI accept the project? (3 marks) (e) Given the recommendations based on the decision rules" above, which project should YNI Ltd. accept? Explain. (2 marks) (f) Now suppose that of the $160m initial expenditure, $30m was used for the purchase of a machine that has an estimated economic life of two years. The machine will be fully depreciated (i.e., zero book value at the end of the machine's economic life) on a straight-line basis and is expected to have a resale value of $5m at the end of the project life. The relevant corporate income tax rate for YNI is 15%. (i) Compute the present value of tax savings from the depreciation of the machine. (3 marks) (ii) Compute the present value of the after-tax salvage value of the machine. (3 marks) (iii) How will this affect the NPV and the acceptance/rejection of the project (as compared to part (a))? Show your calculations