Question 2 (20 marks) Fairy Ltd is considering upgrading its operation servers. Two mutually exclusive plans are proposed by the consulting firm and their respective estimated net cash flows are listed below. The cost of capital is 11.6% per year. Year 0 Plan I -$110,000 $40,000 $40,000 $40,000 $40,000 Plan II -$120,000 $58,000 $42,000 $40,000 $20,000 2 3 4 (a) Compute the payback period for Plan I and Plan II. (6 marks) (b) If Fairy Ltd uses a payback criterion of 3 years or less, which plan would it choose based on the results in part (a) (if any)? (2 marks) (c) Compute the NPV of Plan I and Plan II. Which project should the company accept (if any)? (8 marks) (e) Based on the results in parts (b) and (c), which plan should Fairy Ltd choose? Explain. (4 marks)