A company, XYZ Ltd., is planning to undertake a project to develop a new product. The project is expected to take three years to complete with the following projected costs and revenues:

• Initial investment: $600,000
• Year 1: Costs = $200,000, Revenue = $100,000
• Year 2: Costs = $150,000, Revenue = $250,000
• Year 3: Costs = $100,000, Revenue = $400,000

XYZ Ltd. uses a discount rate of 10% for its projects.

Questions:

1. Calculate the Net Present Value (NPV) of the project.
2. Determine the Internal Rate of Return (IRR).
3. Based on your calculations, should XYZ Ltd. proceed with the project? Justify your answer.