Question 2 OZ Security Services has identified the 5 possible investment projects below. The firm's cost of capital is 10% Project A B D E $10,000 $20,000 $40,000 $50,000 $60,000 Initial Investment Cash Inflows Year (t) 1 2 3 4 3,500 3,500 3,500 3,500 8,500 8,500 8,500 8,500 12,700 12,700 12,700 12,700 18,000 22,000 18,000 22,000 18,000 22,000 18,000 22,000 ? Net Present Value (NPV) Internal Rate of Return (IRR) $1,095 15.0% $6,944 25.2% $257 ? $7,058 16.4% 17.3% Required a) Calculate the NPV for Project E. Rank the projects in descending order of NPV. [3 marks] b) Calculate the IRR for Project C (an approximate answer derived from the use of Financial Tables is acceptable). Rank the projects in descending order of IRR. [3 marks] c) Explain in detail why rankings based on NPV and IRR could conflict for the projects OZ Security Services is considering. Which method is recommended where rankings conflict, and why? [6 marks] d) Assuming the projects are mutually exclusive, which project should be recommended? Justify your answer. [2 marks] [Total for Question 2 = 14 marks]