Question 1 (30 marks) An IT manufacturer is considering a promotion campaign for its new product. It receives two proposals, Campaign A and Campaign B from its marketing consultant. The proposed campaigns are mutually exclusive. The initial investment for A and B are $4,250,000 and $3,000,000 respectively. The finance manager of the IT manufacturer believes that the two systems carry similar risk and that the acceptance of either of them will not change the manufacturer's overall risk. The manager also decides that the manufacturer's 12% cost of capital as the required rate of return. The expected cash flows are as follows: Year Campaign A (s) Campaign B (S) 0 (4.250.000) (3.000.000) 1 1,700,000 850,000 2 1,380,000 850,000 3 1,070,000 850,000 4 900,000 850,000 S 600.000 850,000 a. Use the payback period method to determine which campaign should be adopted. b. Use the NPV method to determine which campaign should be adopted. c. Based on the answers in part a and b, which campaign should be adopted? Explain. d. Which campaign should be chosen if we use Profitability Index instead? Explain