Question 2: (Marks-10) Cam Co has undertaken market research at a cost of $300,000 in order to forecast the future cash flows of an investment project with an expected life of fifth years, as follows: Years Sales revenue (5000) Costs ($000) 1 1.250 2 2,570 1,000 3 6,890 2,500 5 4,000 800 4,530 1,750 500 These forecast cash flows are before taking account of general inflation of 4% per year. The capital cost of the investment project, payable at the start of the first year, will be $3,000,000. The investment project will have zero scrap value at the end of the Fifth year. The level of working capital investment at the start of each year is expected to be 9% of the sales revenue in that year. Tax allowable depreciation would be available on the capital cost of the investment project on a 20% reducing balance basis. Cam Co pays tax on profits at an annual rate of 30% per year, with tax being paid one year in arrears. Cam Co has a nominal (money terms) after tax cost of capital of 10% per year. Required: a) Calculate the net present value of the investment project in nominal terms and comment on its financial acceptability. b) Calculate Internal Rate of Return and comment. c) Discuss comparative analysis of both NPV and IRR. (Explanation only)