QUESTION 2 (8 Marks) A firm plans to expand its existing business and, thus, invest in a new project. The "Initial Cost" on and the expected future "Net Cash Flows" from Project X and Project Y are given in the table below. Item Project X Project Y Initial Cost 20000 20000 Net Cash Flows Year 1 1000 -2000 Year 2 3000 4000 Year 3 8000 10000 Year 4 12000 14000 Year 5 16000 20000 (i) Use the Net Present value (NPV) method to determine which of the two projects the firm should choose to invest in if the discount rate is 4.5% per annum. State your reason/s. (ii) After the first year of the project, if the discount rate has increased to 5% per annum, calculate the new NPV for the two projects. (iii) Find the IRR for project X and Y, which project would you choose to invest in? State the reason/s for your decision.