A certain firm is evaluating the proposed acquisition of a new milling machine. The cost of machine is Rs. 1,000,000 and it would cost another Rs. 200,000 to modify it for special use. The firm has been using the straight-line depreciation assuming 5 years life and Rs 100,000 of salvage value. The machine would require an increase in net working capital (inventory) of Rs.100,000. The milling machine would have no effect on revenues, but it is expected to save the firm Rs. 400,000 per year in before-tax operating costs, mainly in labor. Companys marginal tax rate is 40 percent. If the projects cost of capital is 12 percent, should the machine be purchased? Give your decision based on NPV and IRR.