A company is deciding whether to purchase new equipment that costs P5,000,000. Management estimates the life of the new asset to be five years and expects it to generate additional annual profits of P2M on year1, P1.5M on year 2 & 3, P1M on year 4 & 5. In the sixth year, the company plans to sell the equipment for its salvage value of P500,000. Another similar investment can generate a 12% return. This is higher than the company's current hurdle rate of 10%.

a. Compute the present value of cash flows at IRR

b. Compute the Internal Rate of Return (IRR) using manual computation of "trial & error" method. Show at least two or three scenarios. For an accurate figure, come up with an IRR up to 6 decimal places before converting to %.

c. What is your recommendation to the company for this project?