(a) Skyline Corp uses a process of capital rationing in its decision making. The firm's cost of capital is 12 percent. It will invest only N$80,000 this year. It has determined the internal rate of retum for each of the following projects. 10 Project Project Size Percent of Internal rate of Return A $15,000 14% B 25,000 19 30,000 D 25,000 16.5 E 20,000 21 F 15,000 11 G 25,000 18 H 10,000 17.5 () Pick out the projects that the firm should accept and explain why. (4 marks) (ii) What is the sign of the NPVs of projects C and F at the cost of capital? (1 marks) (b) Aerospace Dynamics will invest N$110,000 in a project that will produce the following cash flows. The cost of capital is 11 percent. (Note that the fourth year's cash flow is negative). Year 1 2 3 4 5 Cash Flow $36,000 $44,000 $38,000 ($44,000) $81,000 1). Calculate the Discounted payback period of the project (2 marks) i). Use the Net present value (NPV) to evaluate if the project should be undertaken. (2 marks) (ii). Use the Profitability index (Pl) to evaluate if the project should be undertaken. (2 marks) (iv). use the Modified internal rate of return (MIRR) to evaluate if the project should be undertaken. (4 marks)