Heade Question 2 (20 marks) - Capital Budgeting Annual cash inflows from two competing investment opportunities are given below. Each investment opportunity will require the same initial investment of $14,000. Mike Steal Company has a doubt about which investment opportunity is going to provide a higher return to the company. Year Investment A 2021 2022 $8,600 8,300 8,400 Investment B $9,000 9,500 9,000 2023 Required: a. Compute the present value of the cash inflows for each investment using a 14% discount rate. Show the formula and calculation steps for the full mark. (6 marks) Present Value of Cash Flows Investment A Investment B Year(s) Amount of Cash Flows Investment Investment B A $8,600 $9,000 2021 2022 8,300 9,500 2023 8,400 9,000 b. Compute Net Present Value. (4 marks) Investment A Investment B Present Value of Cash Flows Initial Cost Net Present Value (NPV) c. What is the Net Present Value? When do we use it? Briefly explain this capital budgeting tool for the full mark. (10 marks)