You are a financial analyst for Apple. The director of capital budgeting asked you to analyze a one-period project. The project has a cost of $10,000 and expected net cash flow of 12,000 at the end of the year. The director assumes the shareholders can earn a 8% by investing for one year in US treasury bonds. Or they can invest in the stock market, which is risky but offers an average return of 10%. a. Define opportunity cost of capital. b. Calculate the project's rate of return. c. Calculate the project's net present value (NPV). What assumption should you make in order to answer the question? d. Would you accept the project? Examine according rate of return rule and NPV rule. In what case NPV equals zero? e. Assume now the director has come back with some revised forecasts. He says the project has changed to 4 years long. The project's expected net cash flows are as follows: Year Project net cash flows 0 (10000) 1 6500 2 3000 3 3000 4 1000 Calculate the project's net present value (NPV). How does NPV influence on firm value