(solution) Question 1 A firm is considering an investment in a project with

(solution) Question 1 A firm is considering an investment in a project with

Two finance questions are attached in this document.

Question 1
A firm is considering an investment in a project with a life of 5 years. The initial investment
consists of $200,000 in plant and equipment and $50,000 in working capital. The project is
expected to generate revenues of $300,000 a year with a gross margin of 50%. Assume that the
fixed expenses consist of depreciation (use straight line to zero as your method) and SGA of
$25,000. Taxes are 30%. Salvage (recovery of the investment in plant and equipment) is $40,000.
The discount rate is 10%. Please fill in the following table.
0 1 2 3 Net Income
(NOPAT)
Operating
CF
Investing
CF
(TOTAL)
CF
NPV [You may show your calculations on this page.] 1 4 5 Question 2
Publicly listed firms have many types of equity investors. What are major categories of these
investors? Among these, which ones are the most influential in running the company and how do
they exercise their influence? Please answer below using no more than 8 sentences.
Answer 2