(A) determine the NPV and the IRR of the project and decide if the project is suitable for the company, for the IRR do not use the function on a spreadsheet, but show your working.

(B) discuss the merits and limitation of of NPV and IRR

21. ConstruMax Ltd is a company specialising in small residential property development and are considering a new site based in Liverpool. Because of the current uncertainty in the current market they plan to develop the site over 5 years. The costs are estimated to be 1,200,000 for the land at the outset and 750,000, 750,000 and 600,000 respectively during the building in years 1-3. Sales will take place in phases and releases of the new apartments are scheduled to bring revenues of 800,000 in the first year, 800,000 in the second year, 1,250,000 in the third year and 700,000 in years four and five. The company currently has a cost of capital of 9%