A H 3 D 01. GEC (16 marks) Please do not use columm A as I would like to use it to record my marking Green Energy Co. (GEC), an environmental energy company is looking to purchase a new methane burning furnace, and wants to evaluate two different models that both have a useful life of 5 years GEC requires a 12 percent return on investment Assume operating cash flows noted below are before tax and not including depreciation Assume a tax rate of 24 and capital cost allowance is taken on a straight line basis over 5 Initial Cost (Cash outfiow) Operating Cash Flow Year 1 Operating Cash Flow Year 2 Operating Cash Flow Year 3 Operating Cash Flow Year 4 Operating Cash Flow Years Model A (33000000) 108.000.00 125 000.00 105,000.00 9000000 6400000 Medel 1225.00000 50.000.00 90,000.00 40.00000 49.000.00 55.000.00 Required answer the following 5 questions and show your work If you apply the back criterion which investment should GEC choose? Why? mans) If you apply the NPV criterion, which investment should GEC choose? Why? mans) If you apply the criterion, which investment should GEC choose? WW mais) If you apply the profitability index criterion, which investment should choose? Why? 13 mars At what discount rate would be indifferent? Show your wont which mode would choose it required to return wes below the indifferent discount Note You MUMS You you do not be wronto Turecon set you double check Wanneren A H 3 D 01. GEC (16 marks) Please do not use columm A as I would like to use it to record my marking Green Energy Co. (GEC), an environmental energy company is looking to purchase a new methane burning furnace, and wants to evaluate two different models that both have a useful life of 5 years GEC requires a 12 percent return on investment Assume operating cash flows noted below are before tax and not including depreciation Assume a tax rate of 24 and capital cost allowance is taken on a straight line basis over 5 Initial Cost (Cash outfiow) Operating Cash Flow Year 1 Operating Cash Flow Year 2 Operating Cash Flow Year 3 Operating Cash Flow Year 4 Operating Cash Flow Years Model A (33000000) 108.000.00 125 000.00 105,000.00 9000000 6400000 Medel 1225.00000 50.000.00 90,000.00 40.00000 49.000.00 55.000.00 Required answer the following 5 questions and show your work If you apply the back criterion which investment should GEC choose? Why? mans) If you apply the NPV criterion, which investment should GEC choose? Why? mans) If you apply the criterion, which investment should GEC choose? WW mais) If you apply the profitability index criterion, which investment should choose? Why? 13 mars At what discount rate would be indifferent? Show your wont which mode would choose it required to return wes below the indifferent discount Note You MUMS You you do not be wronto Turecon set you double check Wanneren