Question 3 A company has $20 million available to invest in new projects. There are three independent projects that it is considering. The after-tax cash ows of the projects are as follows: Project Investment (today) Year 1 cash flow Year 2 cash flow A 20 million 20 million 10 million B 10 million 8 million 7 million C 10 million 6 million 10 million Calculate the IRR, PI and NPV of each of the two-year projects and recommend which project(s) the company should invest in (and why). The company's cost of capital is 15%. (4 marks) Question 4 You are evaluating two different pollution control devices: (a) A ltration system which costs $1.1 million to install and $60,000 annually to operate. It would have to be replaced every ve years. (b) A precipitation system which costs $1.9 million to install, but only $10,000 per year to operate. The precipitation equipment has an operating life of eight years. The company rents its factory and both systems are considered leasehold improvements so straight-line capital cost allowance is used throughout, and neither system has any salvage value. Which system should the company select it the cost of capital is 12% and the tax rate is 40%? Ignore the half-year rule. We calculated the EAC for the filtration system in class. For your assignment, calculate the EAC for the precipitation system