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Amanda James is the chief operating officer for the Omega Corporation-a computer services firm that...

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Amanda James is the chief operating officer for the Omega Corporation-a computer services firm that specializes in airborne support. The company is considering four capital investment projects for the next year. Only one of the four projects under consideration can be chosen. Amanda considers that all projects are equally risky and therefore used 8% as the minimum acceptable rate of return. The company uses a straight-line method for calculating depreciation and the company's tax rate is 33%. Proposal-B: This proposal is to diversify into copy machines. The new business was expected to generate over $1.4 million in sales over the next five years. YR-2 YR-3 YR-4 YR-5 Initial investment Additional Revenue Additional operating costs Depreciation YR-O YR-1 (720,000) 87,500 26,250 17,500 175,000 262,500 393,750 525,000 26,250 26,250 26,250 26,250 17,500 17,500 17,500 17,500 1. Calculate the cash flows for the proposals. 2. Calculate the following for the proposals in the case a. Payback period (PBP) b. Net Present value (NPV) c. What would happen if operating cost were 10% higher than expected? d. What would happen if operating costs were 10% lower than expected? E

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