You have been asked to evaluate a proposal for the Bamboo Traders Proprietary Limited. The directors of the business, Mr. Timoci and Mr. Lulu have a marginal tax rate is 47%. They have given you the following information about the project: It has a 5 year lifetime; the installed cost of the project will be $250 000; the tax office gives this type of asset an effective life of 4 years  the asset will be sold at the end of the project for an estimated $20 000  sales of $90 000 are expected in the first year of the project; sales will grow at a rate of 5% p.a. for each year of the project; the cost of goods sold (excluding depreciation) is expected to be 30% of sales; and the owner's required return is 8%.

Required: 

A. Using NPV, advise the directors of Bamboo Traders Proprietary Limited on the acceptability of the project. Round your calculations for each cash inflow or outflow to the nearest whole dollar. 

B. Why are lost sales included in the calculation of after-tax cash flows? 

C. Provide two factors that can create ranking problems among mutually exclusive projects? Explain each factor and show how the associated ranking problem can be overcome. 

D. Give two non-discounted methods of project appraisal and list two benefits of using such approaches