ConstrucMax Ltd is a company specialising in small residential property development and is 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 revenue 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 4 and 5. The company currently has a cost of capital of 9%.

1. 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 IRR function on a spreadsheet but show your workings.
2. Discuss the merits and limitations of NPV and IRR.