Please assist

QUESTION 2 20 MARKS Mikes Kitchen is a popular restaurant located in Parktown, Johannesburg. Management would like to improve the facility in order to continue to attract existing customers as well as handle large banquet parties. There are two proposals that are currently under consideration. Project 1 Involves a temporary walled structure and umbrellas used for sun protection. Project 2 entails a more permanent structure with a full awning cover for use even in inclement weather. Below is further information about these two proposals: Proposal 1 Proposal 2 Cost 950 000 1 150 000 Installation costs 50 000 95 000 Maintenance costs 30 000 Estimated life span 5 years 5 years Net cash flows 300 000 95 000 Market value at the end of 5 years 300 000 450 000 Tax depreciation 15% on a straight line 15% on a straight line Tax rate 28% 28% Cost of capital 8% 8% REQUIRED Marks (1) |Forecast the relevant cash flows for project 1 and project 2 12 (2) Compute NPV and IRR for Project 1 and Project 2 6 (3) Which project should be selected and why? 2