QUESTION 1 ANSWER ALL PARTS OF THIS QUESTION a. As the CFO of your company, you are considering a potential new project that lasts for 5 years. You have hired a consultant firm to collect relevant marketing data, such as the potential demand for the new product and the trend of sale price in following years. This new project requires new machines and new buildings on the land owned by your company, together with other relevant costs. Which of the following should be treated as incremental cash flows when deciding whether to invest in this project? [3 marks] A. The market value of the land already owned by your company B. The consultant fee for marketing data collection C. Proportion of the rent for the chief executive officer's office D. The amount of cash in net working capital in the year b. You are considering a project requiring a purchase of new machine at a cost of 10 million. The machine will last for 5 years and be depreciated straight line to a book value of zero in the end of the project. In the end of the fourth year, it is possible to sell the machine and the sale price will be 4 million. The tax rate for the asset sales is 20%. The incremental cash flow generated from the asset sales at the end of the fourth year is closest to: [4 marks] A. 2.0 million B. 3.2 million C. 3.6 million D. 4.0 million