Question 4 [10] a) DMC purchased machinery for $13,000 which will give a benefit of $4,000 for 4 years. 1. If the Cost of Capital is 10%, should the company purchased this machinery? 2. What should be the maximum required rate of return that the firm can have and still accept the asset. b) If you borrow $ 1,000 today @ 10% for five years, how much you have to pay in future/after five years if you are charged with Simple interest? c) Cargo wings has investment opportunity for two mutually exclusive projects: Project X Project Y Initial investment (CFO) $500,000 $325,000 Year (1) Cash inflows (CF) $100,000 $140,000 2 120,000 120,000 150,000 95,000 4 190,000 70,000 250,000 50,000 Cost of Capital is 15% i. What is the IRR for each of the projects. ii. Assess the acceptability of each project on the basis of the IRRs found in part a. iii. Which project you will prefer and why