Consider the following Data for questions # 32 - Project A Awo 3193 Initial Year 1 Year 2 Net Cost of New Additional Revenue Additional Operating Costs Depreciation Net increase in income Less: Tax at 35% Increase in after-tax income 32. (5 points) What is Incremental Cash Flow? Project B Net Cost of New Additional Revenue Additional Operating Costs Depreciation Expenditure $(1,200,000) Initial Expenditure $(800,000) Net increase in income Less: Tax at 35% Increase in after-tax income T $287,500 80,500 400,000 -193,000 67,550 -$125,400 33. (5 points) What is the Incremental Cash Flow? Year 1 Star Major Year 3 $375,000 $562,500 $593,750 105,000 129,500 350,000 250,000 -80,000 END OF EXAMI 28.000 -$52,000 Year 4 Year 2 Year 5 Year 3 $725.000 166,250 100,000 83,000 327,500 -29050 -114,625 $53,950 $212,875 $600,000 $450,000 $300,000 $200,000 $100,000 180,000 135,000 90,000 60,000 30,000 160,000 CMA (VSM) sul 260,000 160,000 160,000 160,000 160,000 155,000 50,000 -20,000 BOY TAL-91,000 -90,000 -54,250 -17,500 7,000 31,500 $169,000 $100,750 $32,500 -$13,000 -$58.500 203,000 100,000 422,000 -147.700 $274,600 Year 4 Year 5 34. (15 points) Calculate the Traditional Payback for each Project A and B above. Using the Traditional Payback method, which project should be selected? Show your work. Project A Project B

33. ( 5 points) What is the Incremental Cash Flow? 34. (15 points) Calculate the Traditional Payback for each Project A and B above. Using the Traditional Payback method, which project should be selected? Show your work. Project A Project B 35. (15 points) Calculate the Net Present Value (NPV) AND Internal Rate of Return (IRR) for Project A. Use the WACC THAT YOU CORRECTLY CALCULATED FROM QUESTION 31 ABOVE for your calculations. Show your work, AND BECAREFUL THAT YOU CORRECTLY ANSWERED $31. NPV CALCULATION - Project A IRR 36. (15 points) Calculate the Net Present Value (NPV) AND Internal Rate of Return (IRR) for Project B. Use the WACC THAT YOU CORRECTLY CALCULATED FROM QUESTION 31 ABOVE for the calculation of NPV. Show your work, AND BECAREFUL THAT YOU CORRECTLY ANSWERED \#31. 37. (10 points) Calculate the Productivity Index for Project A and for Project B. 38. (5 points) In comparing the results of Payback, NPV, IRR and the Productivity Index for Project A and Project B, which project will provide the greatest increase in wealth for the firm