STU Company is considering an investment in new equipment. The details are:

• Cost of Equipment: CAD 300,000
• Useful Life: 10 years
• Salvage Value: CAD 50,000
• Depreciation Method: Straight line
• Discount Rate: 10%

Projected Cash Inflows:

Year	Cash flow
1	50,000
2	55,000
3	60,000
4	65,000
5	70,000
6	75,000
7	80,000
8	85,000
9	90,000
10	95,000

a) What is the significance of the discount rate in NPV calculations?

b) Differentiate between the straight line and reducing balance methods of depreciation.

c) Using the data provided, calculate: i) The annual depreciation expense. ii) The payback period. iii) The NPV. iv) The IRR. v) The profitability index.