. You are asked to determine the feasibilityof the following project for an Australian company:

Year 1 Year 2 Year 3 Year 4 Year 5

Revenue US$800,000 US$900,000 US$950,000 US$900,000 US$800,000

Costs A$500,000 A$500,000 A$500,000 A$500,000 A$500,000

• Initial costs are A$1.5 million.
• Tax rate is 30%.
• Current exchange rate is US$0.80/A$.
• The $A is expected to depreciate by 5% each year over the 5 years.
• Required return on the project is 12%.