Discovery DAC is an Irish owned company specialising in distribution services. It is concerned at the pace of changing legislation and the requirement to invest significant amounts on its equipment and licence application every 5 years to maintain the company within regulations. (a) Discuss the impact of negative interest rates AND negative cash flows on the investment decision for companies like Discovery DAC. You should reference the Discounted Cash Flow (DCF) technique and the Internal Rate of Return model and then suggest an alternate approach to handle negative cash flows. Using the cashflow provided below, calculate the Modified Internal Rate of Return for Discovery DAC and discuss your outcome. (Note years 1 and 5 are negative cashflows, as Discovery DAC need install and then service their filtering equipment.) Note, for this calculation you should use an investment rate of 12% to discount any negative cash flows and you should apply 8% to compound positive cash flows. Discovery has a Weighted Average Cost of Capital of 11%