Gamma Ltd. is evaluating two projects. Project C requires an initial investment of $40,000 with the following cash flows:

• Year 1: $12,000
• Year 2: $15,000
• Year 3: $18,000
• Year 4: $20,000

Project D requires an initial investment of $60,000 with the following cash flows:

• Year 1: $20,000
• Year 2: $25,000
• Year 3: $30,000
• Year 4: $35,000

Requirements:

1. Determine the NPV for each project assuming a cost of capital of 8%.
2. Calculate the Modified Internal Rate of Return (MIRR) for each project.
3. Assess which project should be selected based on the highest NPV.
4. Discuss the impact of a higher discount rate on the NPVs of the projects.