The projected costs for a new plant are given below (all numbers are in $ 106):

Land cost= $ 0.5

Fixed capital investment = $75 (all spend in first year)

Working capital= $11

Cost of manufacturing (without depreciation) = $60

Tax rate = 10%

Depreciation method = Current MACR over 5 years

Project life time is five year after startup

Internal rate of return = 9.5% p.a.

For this project, do the following:

a. Draw a cumulative (non-discounted ) after-tax cash flow diagram. [10 Marks]

b. From Part (a), calculate the following nondiscounted profitability criteria for the project:

(i) Cumulative cash position and cumulative cash ratio [10 Marks]

(ii) Payback period [10 Marks]

(iii) Rate of return on investment [10 Mar