Question 3 [Total 34 marks] A British electrical appliances distribution company purchased an American electrical appliances store chain for (75 + D8) million 3 years ago. There was a net loss of (10 + D8) million at the end of Year 1 of ownership. Net cash flow is increasing with an arithmetic gradient of +(5 + D8) million per year starting at the end of Year 2 of ownership, and this pattern is expected to continue for the foreseeable future. In other words, the British company can achieve breakeven net cash flow this year. Assume the minimum required rate of return (MARR) is 25%. (a) Draw a cash flow diagram for the first 5 years of ownership. (6 marks) (b) A French company has just offered the British company (159.5 + D8) million to acquire its American store chain. Use Present Worth (PW) analysis to determine whether the MARR of 25% will be realized at this price. (8 marks) (c) What is the annual worth for the first 10 years of ownership? Round up your final answer to the nearest million. (10 marks) [Hint: you may want to use gradient formula to convert gradient to annuity.] (d) If the British company continues to own the store chain, determine what selling price must be obtained at the end of 10 years of ownership to just make the MARR of 25%? Round up your final answer to the nearest million. (10 marks) [Hint: You may convert all the cashflows to present value first, and then convert the present worth back to future worth. In this case, you may want to use gradient formula to convert gradient to present value. The other way to do it is to convert all the cashflows to future value to figure out the future worth directly.]