1.a

b.

c.

d.

A feasibility study is to be conducted by Pirelli Tires to ascertain if there is a market for studded winter tires using a different rubber compound than the industry norm. If the feasibility study suggests Pirelli to go ahead with the project, they will use a building that is currently rented out to a third-party company for $200,000 per year. The $200,000 of rental revenue they would not be receiving if Pirelli goes ahead with the project is an example of: A variable expense/revenue An opportunity cost A sunk cost O A fixed expense/revenue A feasibility study is to be conducted by Pirelli Tires to ascertain if there is a market for studded winter tires using a different rubber compound than the industry norm. If the feasibility study suggests Pirelli to go ahead with the project, they will use a building that is currently rented out to a third-party company for $200,000 per year. The feasibility study that Pirelli funded is an example of: A variable expense/revenue An opportunity cost A sunk cost A fixed expense/revenue Denon Consulting Ltd. is considering a new project whereby they will invest $500,000 in a specialized machine used in training. Denon is in the 25% tax bracket, their cost of capital is 9% and the CCA rate on the machine is 30%. Assuming Denon takes maximum CCA each year, what is the CCA to be taken on the machine in year 3? $73,500 $77.648 $89,250 $100,000 An investor has been invited to invest in a project that will require an initial investment of $10,000. At the end of years 1, 2 and 3 the investment will return $2,000, $4,000 and $6,000 respectively. She figures her Cost of Capital is 7.5%. What is her IRR? 8.04% 8.21% 9.79% 10.00%