1. a. Given the information below: Project Z Year 0 Cash Flow -172,800 Year 1 Cash Flow 86,400 Year 2 Cash Flow 69,120 Year 3 Cash Flow 54,720 Year 4 Cash Flow 34,560 Year 5 Cash Flow 17,280 With a discount rate of 12.5% discount rate, a. Determine the payback period and discuss whether this project should be accepted if the cut-off period set by the company for such projects is 3 years [2 marks] b. Determine the net present value and discuss whether this project should be accepted. [3.5 marks] c. Show that the IRR of the project is approximately 20.826% and discuss whether this project should be accepted. [3.5 marks] d. Shouldtheprojectbeacceptedfinally? [1mark] Show your working clearly and provide your answer to 2 decimal places.

b. The short-term financing policies can be flexible or restrictive Define Flexible and Restrictive policies. Compare and contrast the advantages and disadvantages of these two policies.

c. Suppose a firm uses its company's cost of capital to evaluate all capital projects. Briefly explain what kinds of mistakes may be made, and why?