Question 4 Mendoza Limited is looking into some potential investment projects. Relevant information is summarised below: Project Cost of Investment Riela $1,060,000 Livia $1,050,000 Estimated net cash flows Year 1 2 $ 240,000 280,000 320.000 340.000 400,000 3 230,000 260,000 300,000 320,000 390,000 4 5 The required rate of return is 14%. (Refer to Appendix A for discount factors] Year Cash Flow Discount Factor at (to fill the discount factor Present Value of Cash Flow $ Note: Copy the above table and complete the calculations in your answer file. Required: a. Calculate the Net Present Value (NPV) of both projects. [Note: round off the values to the nearest dollar) [14 marks] b. Evaluate and advise the management which one of the projects should be undertaken, if any. [3 marks) cMendoza Lunited is presented with Project PA52 and Project VZ61. Project PAS2 has a payback of 5 3 years and Project VZ81 has a payback period of 39 years. It is the company policy to accept only projects which have a payback period of 4 years and below. [Note that part c is independent of part a and b) Required: Advise Mendoza Limited, which project should be selected undertaken and why [3 marks [Total: 20 marks) Page 6 of 10