Question 2: Jim Bingham is considering starting a small catering business. He would need to purchase a delivery van and various equipment costing $150,000 to equip the business and another $60,000 for inventories and other working capital needs. Rent for the building used by the business will be $30,000 per year. Jim's marketing studies indicate that the annual cash inflow from the business will amount to $125,000. In addition to the building rent, annual cash outflow for operating costs will amount to $50,000. Jim wants to operate the catering business for only five years. He estimates that the equipment could be sold at that time for 10% of its original cast. The working capital will be fully released for other purposes at the end of the six years. Vim uses a 14% discount rate Required: Would you advise Jim to make this investment? Question 3: Barbara is preparing a budget for her mily.racing Team Olinda Racina, after recently confirming two maior Question 3: Barbara is preparing a budget for her rally racing team, Olinda Racing, after recently confirming two major sponsorship agreements for the next two years with a large Canadian publishing company and with a local tourist attraction. The plan is to compete in each of the six events in the Canadian championship over the next two years. Barbara estimates that she currently has $50,000 invested in her rally car "Zuke" and in the tools and equipment the team owns. Before the new season starts, her estimate is that car upgrade costs of $5,000 are required. The six races run from February to November, so Barbara has assumed cash flows otherwise occur evenly throughout the years as follows: Year 1 12,000 3,000 Year 2 12,000 3,000 Cash inflows from major sponsorships Cash inflows from prizes, contingencies Cash outflows: Maintenance and repairs Tires Entry fees Racing fuel Hotels, meals, airfares, transport 5,000 5.000 5,000 1,000 5,000 5,000 5,000 1,000 9.000 9,000 Barbara is using a cost of capital of 12% in his budgeting. Olinda Racing currently has $18.400 in the bank to be used to cover net costs Required: Using the above data and a net present value approach, determine if Olinda Racing needs to raise additional funding to compete over the next two years