YouToo plc is evaluating two alternative investment projects, Project Bono and Project Edge, only one of which can be implemented. Each of the projects would require the same initial capital investment of 14 million. Four years after making the investment of 14 million, Bono will generate a single cash inflow of 27.7 million. Using the NPV technique, YouToo plc's Treasurer has recommended that the company should choose Project Bono. YouToo plc's Managing Director, who prefers to go by the IRR technique, believes that the company should choose Edge, which would offer the following cash flows over the same 4-year period: Net Cash Flows ( millions) Points in time i to ti t2 t3 t4 (yearly intervals): Project Edge -14 9 6 3 1.4 The company's weighted average cost of capital has been estimated at 13%, and this is taken as the opportunity cost of capital for investment projects. The risk level for the proposed projects is the same as that of the company's existing range of activities. Required: (a) Calculate the following in respect of each of the two projects: (i) Net present value (ii) Internal rate of return What would be the ranking of these two projects according to each of the above investment appraisal techniques? (9 marks) (b) Explain the technical problems that may be faced in application of the IRR technique, particularly under conditions of mutual exclusivity. Where relevant, use your findings in part (a) together with an appropriate diagram to illustrate your answer. Which project would you recommend that You Too plc should select? (8 marks) (c) Calculate the Modified Internal Rate of Return (MIRR) of the two projects, and explain how and to what extent this technique addresses the limitations of the IRR method of investment appraisal