Q2. St Lawrence Bus Lines is offered a contract for busing schoolchildren that will produce an annual profit of $70,000 for 7 years. To fulfill the contract, St Lawrence Bus Lines would have to buy buses at a total cost of $433,000. At the end of the contract, the resale value of the buses will be $80,000. Should St Lawrence Bus Lines sign the contract if the cost of capital is

1. 5% p.a b) 8% p.a. (6 marks)

3. Find the IRR (Internal Rate of Return) , correct to two decimal places.