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Question 2 Company NU is considering about the following information on a project: (1) It has a 5-year lifetime (2) The initial investment in the project will be $50 million, and the investment will be depreciated by $5 million each year. (3) The revenues are expected to be $40 million in the first year and to grow 10% a year after that for the remaining 4 years. (4) The cost of goods sold, excluding depreciation, is expected to be 80% of revenues. (5) The tax rate is 40%. a). Estimate the pre-tax return on capital (based upon [35 Marks] b). Estimate the after-tax return on capital (based upon average book capital over the year), by year and on average, for the project. [30 Marks] c). What is economic value added (EVA)? Suppose that the firm's cost of capital is 3.5%. Should the firm take this project from based on its EVA? [20 Marks] b). Estimate the after-tax return on capital (based upon average book capital over the year), by year and on average, for he project. [30 Marks] c). What is economic value added (EVA)? Suppose that the firm's cost of capital is 3.5%. Should the firm take this project from based on its EVA? [20 Marks] d). We discussed management objectives during the course. Except from comparing return of the project with the firm's cost of capital, are there any other factors that should be considered when assessing whether to take the project? Please illustrate with examples. [15 Marks]