01 Faircliffs PLC has up to a maximum of 3,500,000 to invest in new capital projects in the next financial year. Numerous potential investments have been considered and the following final list has been produced. Investment project 1. Purchase licence to manufacture new product. Cost M Life (years) Cash flows Annual Cash Inflows 1.507 430,000 2. Increase existing production facilities 2.00 5 Annual Cash Inflows 600,000 3. Introduce labour saving technology 0.9 3.0 Cost Savings Year 1 600,000 Years 2 & 3 300,000 each Cash inflows will commence in year 1 and the company's cost of capital is 15%. Discount Factors Year Net Present Value 15% 30% 0.870 0.769 0.756 0.592 0.658 0.455 0.572 0.350 0.497 0.269 0.432 0.207 0.376 0.159 Value of Annuity 15% 30% 0.870 0.769- 1.626 1.3164 2.283 1.816 2.855 2.166 3.352 2.436 3.784 2.6434 4.160 2.802 Required: (a) Calculate the NPV of each investment. (b) Calculate the internal rate of return of each investment. (c) Assuming investments are divisible and independent which would you advise Faircliffs to fund and why