Answer Happy

a) A firm intends to embark upon an aggressive investment to fend off competition from new entrants into the market. The initial costs of the new investment are £10 million today, with further expenditure on maintenance costs of £1.5m in each of the years 3 and 4 to maintain operational efficiency. The net cash inflow for the years 1 to 4 is £5 million per year. Production is expected to cease at the end of year 5 at which point some machinery will be sold for £2.5 million. The cost of capital is 15%. Calculate the net present value (NPV) and the internal rate of return (IRR) of the project. (40 marks) b) The Business Roundtable, an association of chief executive officers (CEOs) of America's leading companies, redefine the purpose of a corporation by pledging among others, the following: [We share a fundamental commitment to all of our stakeholders. We commit to [...] deliver value to all of them, for the future success of our companies, our communities and our country. -Business Roundtable Statement on the Purpose of a Corporation, August 19, 2019. Using relevant literature, the differences between stakeholder primacy and shareholder capitalism and how each relates to shareholder wealth maximisation. (60 marks)