Subject : Engineering Economics

I need explain Answer of Both

Q 1. Briarcliff Stove Company is considering a new product line to supplement its range line. It is anticipated that the new product line will involve cash investment of $900,000 at time 0 and $1.5 million in year 1. After-tax cash inflows of $350,000 are expected in year 2, $400,000 in year 3, $450,000 in year 4, and $500,000 each year thereafter through year 6. Find Payback period, net present value and profitability index if the cost of capital is 6.5% for this project. (10)

Q 2. At the beginning of last year, you invested $8,000 in 60 shares of the Alibaba Corporation. During the year, Alibaba paid dividends of $6 per share. At the end of the year, you sold the 60 shares for $49 a share. Compute your total return on these shares and indicate how much was due to the price change and how much was due to the dividend income. (05)