Reference no: EM133047816

Comfoods Inc. is considering acquisition of a new wrapping machine. 

The initial investment is estimated at Php 1.4 million and the machine will have a 5-year life with no salvage value.  The project's future cash inflows are as follows:

Year                Cash Inflow (Php)

1                      400,000
2                      375,000
3                      300,000
4                      350,000
5                      200,000

Using a 6% discount rate, determine the net present value (NPV) of the machine given its expected operating cash inflows shown in the above table.  Based on the project's NPV, should Comfoods make this investment?

2. Billabong Tech uses the internal rate of return (IRR) to select projectsProject T-shirt requires an initial investment of Php 25,000 and generates cash inflows of P8,000 per year for 4 years.  Project Board Shorts requires an initial investment of Php 32,000 and produces cash inflows of Php 12,000 per year for 5 years.
 
Calculate the IRR for each of the following projects and recommend the best project based on this measure.