Answer all five questions (Total 50 Marks) . Question One: 1. Jackie Ltd is considering investment in a project with below details. Analyse this investment using Economic Value Added Method (EVA): It is a three-year project with initial investment of $3 Million, depreciating over three years using straight line method. Expected EBITDA for years 1-3 are $2 Million, $2.5 Million, and $3 Million respectively with WACC 12% and tax rate 30%. Increases in net working capital investment each year is 10% of previous year net invested capital (5 marks 2. Explain why some projects are earnings accretive while having negative net present value? (2 marks) 3. Discuss what P/E ratio is, how it is calculated, what it shows, and why firms with high P/E ratio tend to choose bad projects with good earnings (underestimating their true cost of equity capital)? (5 marks) . 2/ 5 fo FO 710 & 5 6 7 8 9 R T Y U ils