A company intends to invest in project M and Y whose original cost 140,000,000 and 175,000,000 respectively. Installation charges for M is 2,000,000 and transportation of 1,000,000 while for Y installation costs will be 800,000 and transportation of 156,000. The working capital recouped at end of 5 years for both projects is 680,000. A Project manager will earn a salary of 100,000 per month to run both projects hence should be share proportionately. Investors in the company are demanding a rate of compensation of 14 % and the company pays tax at the rate is 30%. Depreciation is on cost at the rate of 10% with residue value of 400,000 for Project M and non for Project Y.

The expected cash flows and probability is as follows:

Project M Probability Project Y

Year 1 12,000,0000.2 14,000,000

Year 2 10,000,0000.1 12,000,000

Year 3 8,000,0000.3 10,000,000

Year 4 13,000,000 0.26,000,000

Year 5 9,000,000 0.24,000,000

The company expects to abandon the projects with the following values

Project MProject Y

Year 1 130,000,000140,000,000

Year 2 115,000,000120,000,000

Year 3 100,000,00090,000,000

Year 4 80,000,00060,000,000

Required

1.What is the Net Present Value of the projects, should the projects be undertaken

2.Suppose the Company wants to abandon the projects, assess which year is the best for such decision

3.Determine the project with the highest risk