Eclipse plc has paid 50,000 for the development of a smart light mobile phone charger. The project will be discussed in the next Board and if the project is approved, a 480,000 initial investment for equipment will be required, at the start of the first year, 1st January 2022. For the needs of the production, at the start of the first year, there will also be an increase of the stock materials by 60,000 and an increase of the working capital by 40,000. The increased stock materials and working capital will be released at the end of the 5 years of operations. The project will be operational for 5 years and at the end, the production will cease and the initial investment in equipment will be sold for 80,000. The project manager has produced an Income Statement for the 5 years of operations of the project, as follows: Sales Materials Variable Costs Overheads Depreciation Net Profit (Loss) 2022 800,000 480,000 90,000 50,000 80,000 100,000 2023 800,000 480,000 80,000 40,000 80,000 120,000 2024 800,000 480,000 70,000 48,000 80,000 122,000 2025 640,000 384,000 64,000 48,000 80,000 64,000 2026 400,000 240,000 40,000 48,000 80,000 8,000 The sales are on credit and the customers receive one year of credit. The overhead figures in the above budget include two elements: one element (50%) is the direct overheads occurred due to the start of this new project and another element (50%) is due to the reallocation of other existing overheads. We assume that there is no taxes or inflation, and the cost of capital is 10%. Required: a) Estimate the net present value of the project and advice the management of the company on whether to approve or reject the proposal. Show clearly all your calculations. (11 marks) b) Explain to the management of the company what the alternative methods of investment appraisal are, and which is the most reliable. (7 marks) c) Explain how managers can make better investment decisions beyond the technicalities of the investment appraisal methods