Question-1 The following information about two mutually exclusive projects R and S are relevant for requirements 1(a) to 1(c) only. Max-W Company is considering investing in project R, which will require an outlay of $900 million. The project will have a four-year life and at the end of that time, the equipment will be scrapped. The project is expected to generate the following annual cash flows: Year-1 Year-2 Year-3 Year-4 Cash inflows $690m $590m $570m $480m Cash outflows $280m $220m $220m $200m The company has a required rate of return of 10.71%. The company normally has two-year payback criteria. The alternative project-S offers the following net cash flows: Year-0 ($900m); Year-1 $252m; Year-2 $321m; Year-3 $441m and Year-4 $502m. (a) Calculate the (1) NPV, (ii) IRR, (ili) PVI, (iv) Payback period, (v) Discounted payback period for projects R and S. (b) Calculate the crossover rate (between projects R and S) based on the cash flow data mentioned above. Show the range of required rates for which either project-R or project-S would be preferred. (c) Based on your findings in requirements a and b above, what would be the decision of selection of project (when the required rate of return is 10.71 percent)? Question-2 The following information relating to an investment in equipment has been extracted from the books of CB Ltd Ltd: The total purchase price is $61,237; salvage value is $1,024 at the end of year 3. net sales revenue (relating to the equipment): Year-1 $34,000; Year-2 $28,000 and Year-3 $23,000; applicable tax rate is 32%; and the required rate of return is 11%. If the depreciation rate is 21% straight line, calculate the tax amount in the third year relating to the sale of the equipment only