QUESTION $1$

Discover ltd is considering a project with requirement of R$.600,000$ the details of which are below:

Expected useful life is $6$ years$($Straight$-$line depreciation$)$ with a salvage value of $150,000$ the cost of capital is $13\%$ while the tax rate is $28\%$ expected net profit are as follows:

YEAR NET PROFIT

$160,000$

$290,000$

$3110,000$

$4150,000$

$5110,000$

$690,000$

Required

$1.$ What is the total depreciation expense for the project over its useful life, assuming straight$-$line depreciation, and what is the book value of the project at the end of year $6?$

$2.$ Calculate the present value of the expected net profits generated by the project over its useful life, considering a discount rate of $13\%$ and a tax rate of $28\%.$

$3.$ With a salvage value of R$.150,000,$ how does this affect the project's overall cash flows and net present value, considering the salvage value is realized at the end of the project's useful life and accounting for taxes?