QUESTION ONE WIELD plc is considering procuring a new machine in order to produce a new product called 'VuVe'. The machine will cost K2.5million and is expected to last for 4 years at which time it will have an estimated scrap value of K400,000. They expect to produce 119,000 units per year of 'VuVe' which will be sold for K25 per unit in the first year. Production costs per unit (at current prices) are as follows: Materials K9 Labour K8 Materials are expected to increase by 7% per year and labour will increase by 5% per year. Annual fixed overheads of the company are estimated to amount to Kimillion after the investment. The management accountant has determined that 10% of these are directly attributed to the investment in the new machine. WIELD Plc expects the selling price of the product to increase by 9% annually. An additional K250,000 of working capital will be required at the start of the project. The minimum expected rate of return by investors from the project is 10%. The corporate tax is 30% per year. Required a) Calculate the NPV of the project and advise as to whether or not it should be accepted. (12marks) b) Calculate the internal rate of return of the project and advise as to whether or not it should be (7marks) accepted. (6marks) c) Explain the concept of time value of money in the context of finance