Question 1 A company is considering investment in a project requiring an outlay of $1.6 million. Annual net cash inflows of $0.55 are expected for 5 years, with no residual value at the end of the five year period. The cost of capital (required discount rate) is 12 %. Required: (a) Calculate the NPV of the project at the cost of capital of 12 % per year. (b) Calculate the IRR of the project using discount rate at 12 % and 20% per annum. Question 2 B&B has been looking at a potential project which has the following cash inflows: End of Year $000 1 15 2 17 3 22 4 2 To acquire these inflows B&B would have to invest $36,000 in fixed asset now. The assets would be expected to be sold at the project for $ 2000 Required: (a) Calculate the NPV of the project using 10 % and 20 % as the discount factors. (b) Using your results from part (a) calculate the internal rate of return for the investment to one decimal place. (c) Comment on the use of these two net present values to estimate the internal rate of return