Q. 1. Illustrate what is the project’s cost of equity? Illustrate what is the appropriate discount factor to use for evaluating the refrigerator project?

2) Forecast the project cash flows for the next eight years. Illustrate what assumptions did you use? Use straight line depreciation for this case.

3) Use the appropriate capital budgeting techniques to evaluate the project.

4) Use the average demand scenario to evaluate the sensitivity of the projects NPV with respect to sale price of the refrigerator and the cost of the compressor.