21:01 3HZOEHE 0-0 ?-78%[:]' keats.kcl.ac.uk Question 3 A company is considering which of two mutually exclusive projects it should undertake. They both have three-year lives and capital cost of 300,000 payable immediately, and a total cash inflow of 400,000. The difference between both projects is that the incidence of the 400,000 of cash flows is very different (see order of cash flow below). The company anticipates a cost of capital of 10%. Cash inflows Project Donald Project Duck Year 000 000 1 200 50 2 1 50 1 50 3 50 200 Required: (a) Calculate the NPV and IRR of each project and recommend, with reason which project you would undertake (if either). (12 Marks) (b) Explain why NPV is useful for capital investment appraisal. (6 Marks) (Total 18 Marks)