Project R delegates all the development work to outside companies. The estimated cashflows for Project R are (where brackets indicate expenditure): Beginning of Year 1 (150,000) (contractors fees) Beginning of Year 2 (250,000) (contractors fees) Beginning of Year 3 (250,000) (contractors fees) End of Year 3 1,000,000 (sales) Project S carries out all the development work in-house by purchasing the necessary equipment and using the companys own staff. The estimated cashflows for Project S are: Beginning of Year 1 (150,000) (New equipment) Continuous payments Through Year 1 (75,000) (Staff Cost) Continuous payments Through Year 2 (250,000) (Staff Cost) Continuous payments Through Year 3 (250,000) (Staff Cost) End of Year 3 1,000,000 (sales) REQUIRED a) Calculate the net present value for Project R and Project S using a risk discount rate of 20% per annum. Using net present values as a criterion, which project is preferable? b) Find the internal rate of return for Project R and Project S and hence determine which project is more favourable using this criterion.