Question $2$

Required:

a$)$ Determine the relevant after$-$tax cash flow for the purchase of the CIM equipment at each of the following three points:

i$.$ Project initiation

ii$.$ Project Operations

iii. Project Disposal

b$)$ Calculate the net present value of the CIM proposal. Should Tomas Shoes proceed with the investment?

c$)$ Calculate the payback period $($after tax$)$ for the CIM proposal.

$(1$ mark$)$

d$)$ Discuss the potential difficulties of Tomas Shoes using discounted cash flow analysis to decide about the CIM manufacturing equipment. What other factors should Thomas Shoes take into consideration in making a decision?