TC is considering opening an office in either Frankfurt or Munich in 2022 (year 0). Samantha Plug, your supervising partner and a senior partner at TC, has concerns regarding the firm's approach to evaluating the proposals. The partners are in favour of opening the office in Munich based on its internal rate of return (IRR). Samantha has carried out a net present value (NPV) analysis of the figures (calculated at a discount rate of 10%) which suggests the firm should open an office in Frankfurt. Please see the grid below in which the projected net cash inflows after tax for each project are set out together with their respective IRR and NPV. Samantha is going to present her views at the strategy meeting of the senior management team and would like you to produce a note for her to circulate at the meeting. She has asked you to set out: (a) A clear explanation of IRR and NPV. Please bear in mind that not all of the partners are familiar with corporate finance so please be clear and thorou your explanation. You are not required to carry out any calculations, the IR NPV figures in the grid below are correct. (5 marks) (b) An explanation of why the IRR and NPV produce a different result in this scenario (6 marks) (c) An analysis of each of IRR and NPV in which you carefully set out their relative advantages and disadvantages as project evaluation tools in this scenario. (14 marks) (d) A conclusion which includes whether you would recommend using any other project evaluation tools and which of IRR or NPV you would use in this instance. (5 marks) Projected net cash inflows after tax Year 0 2 3 4 unl IRR NPV discount rate of 10% applied 21.424% 174,775.75 Munich (175,000) 120,000 100,000 50,000 50,000 50,000 249,774.02 Frankfurt (175,000) 25,000 60,000 100,000 125,000 150,000 10.78%