QUESTION TWO Germini ltd has a project with an initial cost of ksh 25 million and its considering whether to invest in it in the coming year. The company has decided to establish the projects internal rate of return as follows; Year Cash flows (Ksh) 1 9,000,000 2 8,000,000 3 7,000,000 4 6,000,000 5 5,000,000 Germini ltd is considering a mix of financing sources for this business as follows: Source Amount (ksh) Before-tax cost Equity capital 15,000,000 18% Preference capital 2,500,000 11% Debt capital 7,500,000 11.4% Required: a) Demonstrate that the internal rate of return (IRR) for this project is 13.87% (10 Marks) b) Advise the management with adequate explanation as to the acceptability of this project (10 Marks) (Total: 20 Marks)