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The Finance Director prefers the project with the higher NPV while the MD prefers the one with the higher IRR

The Finance Director prefers the project with the higher NPV while the MD prefers the one with the higher IRR

Company Y considers 2 mutually exclusive projects to undertake. The Finance Director prefers the project with the higher NPV while the MD prefers the one with the higher IRR especially since both projects have same initial outlay and length of life.The company anticipates cost of capital to be 10% and the net after tax cash flows are as follows ($ ‘000):Project XYear 0 : -200Year 1 : 35Year 2 : 80Year 3 : 90Year 4 : 75Year 5 : 20Project Y:Year 0 : -200Year 1 : 218Year 2 : 10Year 3 : 10Year 4 : 4Year 5 : 3Questions:a: What are the NPV and IRR of each projectb: Which project would you undertake, if any(with reasoning)c: explain inconsistency in ranking of the 2 projects in view of the remarks of the directorsd: identify the cost of capital at which your recommendation in (b) would be reversed and comment on it please.- Excel can be usedCompany Y considers 2 mutually exclusive projects to undertake. The Finance Director prefers the project with the higher NPV while the MD prefers the one with the higher IRR especially since both projects have the same initial outlay and length of life.The company anticipates cost of capital to be 10% and the net after tax cash flows are as follows ($ ‘000):Project XYear 0 : -200Year 1 : 35Year 2 : 80Year 3 : 90Year 4 : 75Year 5 : 20Project Y:Year 0 : -200Year 1 : 218Year 2 : 10Year 3 : 10Year 4 : 4Year 5 : 3Questions:a: What are the NPV and IRR of each projectb: Which project would you undertake, if any(with reasoning)c: explain inconsistency in ranking of the 2 projects in view of the remarks of the directorsd: identify the cost of capital at which your recommendation in (b) would be reversed and comment on it please.- Excel can be used

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