Question:Problem #1:Given the recent problems with air population in major cities, you decide to start selling a product called "Perri-Air," which is canned air. You alreadyspent$25,000 developing the can design and marketing materials.

Problem #1a:Note that the $25,000 you already spent will not come back to you no matter what happens. What is this cost? Do we consider it in the cash flow computation?

ANSWER:

Problem #1b:You need to invest $100,000 in in the machinery. Your project lasts for 5 years. Assume you depreciate to zero at the end. How much is the depreciation per year if you use the straight line depreciation?

ANSWER: