Lyon Ltd is contemplating investing in a new construction technique.

The initial investment totals 5,000,000. A product life of five years is anticipated, with an investment of 300,000 required in year 3. Annual cash inflows are expected to be:

Year

1 2,000,000

2 1,750,000

3 1,250,000

4 750,000

5 500,000

The target rate of return is 10%.

Calculate the NPV and IRR for the project. Recommend a course of action for Lyon Ltd.