Question 3 (Total 12 marks) Net Present Value (NPV) is an indicator of how much value an investment or project adds to the firm to help firm in making investment decision. NPV rule is the most accurate and reliable rule, in practice a wide variety of rules are applied. However, Graham and Harvey's study indicates that one-fourth of U.S. corporations do not use the NPV rule. Exactly why other capital budgeting techniques are used in practice is not always clear. Similar to NPV, the internal rate of return (IRR) investment rule, one of capital budgeting tools is based on the concept that the return on the investment opportunity you are considering is greater than the return on other alternatives in the market with equivalent risk and maturity. Required: a) In a case where there are two IRRs (multiple), can the IRR rule be applied in making investment decisions? Explain in depth with an illustration (graph). (8 marks) b) How would you explain the phenomenon where NPV rule may disagree with IRR rule and invalidate the IRR rule for mutually exclusive investments? (4 marks)