Question 2 The Penny Wheel Company is considering the following two projects, but the firm can only invest in one of them: Initial outlay Net cash flows: Yearl Year 2 Year 3 Year 4 The company's cost of capital is 12%. Project M 800,000 Project C 800,000 400,000 100,000 400,000 300,000 100,000 500,000 50,000 500,000 Required: a. Calculate the payback period for each project b. Calculate the net present value for each project. c. (4 marks) (10 marks) "Essential to an understanding of the investment appraisal techniques of payback, rate of return and net present value is the role of depreciation" accounting Explain how you would treat depreciation in the computation for each of the above appraisal techniques. d. (5 marks) Explain why the Net Present Value is considered technically superior to the Payback and Profitability as an investment appraisal technique even though the latter are said to be easier to understand by management. (Your answer should highlight the strength of the NPV method and the weaknesses of the other two methods). (6 marks)