4. (a) What is net present value (NPV)? Find the NPV of Projects M and P. (Show your workings clearly by tabular format) (b) According to NPV, which project or projects should be selected if they are independent? What if they are mutually exclusive? Justify your answers by stating the rationale of NPV. (c) Would the NPV change if the required rate of return changed? Please explain.

5. (a) What is internal rate of return (IRR). Find the IRR of Projects M and P. (Show your workings clearly by employing the trial-and-error method) (b) According to IRR, which project or projects should be selected if they are independent? What if they are mutually exclusive? Justify your answers by stating the rationale of IRR. (c) Would the IRR change if the required rate of return changed? Please explain.

Monster Resort Corporation You are just appointed as the Financial Manager for Monster Resort Corporation. On your first duty reporting day, your boss has given you two proposed investment projects with the following estimated cash flows. Year Expected Net Cash Flow Project Me Project P ($100 000) ($100 000) $10 000- $70 000 $60 000 $50 000 580 000 $20 000 U Project M involves constructing a new resort in a new market, it would take some time to build up the clientele, and so the cash inflows would increase over time. Project P involves renovating of an old resort in an economically saturated market, and its cash flows would decrease over time. Both projects have 3-year project lives. Depreciation, trade-in values, met working capital requirements, and tax effects are all included in these cash flows. Both projects have risk characteristics which are similar to the company's average project. Monster Resort Corporation requires a rate of retum of 10% per year. You are now instructed to determine whether one or both of these two investment projects should be selected And you decided to apply three common capital budgeting techniques for evaluation e