Q 1 AB plc is considering two mutually exclusive investment projects and the cash flow are provided below. The company has spent 12,000 on a feasibility study of both projects Project M Project N Net cash flows in 000s Year 0 Year 1 (45) 13 13 18 48 Year2 Year3 Year4 Year5 15 15 2 If the project goes ahead, the company will have to give up space in one of its warehouses that currently earns the company 15,000 rental income each year Scrap values at the end of 5 years are 12,000 and 16,000 respectively for projects M and N. The company is funded 80 % by equity capital and 20 % by debt capital in market value terms. The cost of equity is 20 % and the after tax cost of debt is 10 %. The company sets a target payback period of 3 years. Required:- O Calculate the Net Present Value (NPV) and payback period for the 2 projects. Q Which of the two projects is better for the company to undertake. State your Q 1 AB plc is considering two mutually exclusive investment projects and the cash flow are provided below. The company has spent 12,000 on a feasibility study of both projects Project M Project N Net cash flows in 000s Year 0 Year 1 (45) 13 13 18 48 Year2 Year3 Year4 Year5 15 15 2 If the project goes ahead, the company will have to give up space in one of its warehouses that currently earns the company 15,000 rental income each year Scrap values at the end of 5 years are 12,000 and 16,000 respectively for projects M and N. The company is funded 80 % by equity capital and 20 % by debt capital in market value terms. The cost of equity is 20 % and the after tax cost of debt is 10 %. The company sets a target payback period of 3 years. Required:- O Calculate the Net Present Value (NPV) and payback period for the 2 projects. Q Which of the two projects is better for the company to undertake. State your