Question 4 As part of an equity valuation task set by you supervisor, you are required to value two similar sized airline companies operating in Australia. These two companies are investigating capital expenditure on comparable sized aircraft for domestic travel in which they will invest However, your client is not sure which is better and has sent the relevant details to you to advise upon. The characteristics of the two projects are given below: Initial Outlay (10) Annual Cash Flows (CF) Life of system AIR OZ(Em 373) $60,000,000 $14,000,000 Down Under Air(Za16) $95,000,000 $18,000,000 15 years 10 years Notes: 1) All annual cash flows are after tax and depreciation. 2) A flat rate of 15% per annum is estimated as the risk in both of these projects. Your client wishes you to provide detailed calculations indicating which project you believe to be the best. The client will then decide whether to invest into the company looking to invest in the project 4 Page