You are considering purchasing a new business. You prepare a cash-flow forecast and your estimates are as follows: Purchase price: $60,000 Expenses: Years 1 5: $15,000 Revenue: Years 1 3: $25,000 Years 4 5: $30,000 You expect to sell the business for $70,000 at the end of the fifth year. Assume all cash inflows occur at the end of each period and all cash outflows occur at the start of each period. a. Calculate the NPV at a 14.0% rate of return. Would you accept the project? (6) b. Calculate the IRR. Would you accept the project if your cost of capital was 20.0%? (2) c. What is the NPV of the new business if the required Return On Investment is the same as the IRR? (2)

need to edit, it's safer to stay in Protected View Enable Editing QUESTION 9 (10 marks) You are considering purchasing a new business. You prepare a cash flow forecast and your estimates are follows: $60,000 Purchase price: Expenses Years 1-5 Revenue: Years 1-3: Years 4-5 $15,000 $25,000 $30,000 You expect to sell the business for $70,000 at the end of the fifth year. Assume all cash inflows occur at the end of each period and all cash outflows occur at the start of each period a Calculate the NPV at a 14.0% rate of return. Would you accept the project? (6) b. Calculate the IRR Would you accept the project if your cost of capital was 20.0% (2) What is the NPV of the new butines if the required Return On lovestment is the same as the IRR22 D Focus