A. T. Industries is considering the purchase of a new manufacturing equipment. The relevant details are:

• Cost of Equipment: USD 200,000
• Expected Useful Life: 5 years
• Salvage Value: USD 30,000
• Depreciation Method: Double Declining Balance
• Cost of Capital: 12%

The projected cash flows are as follows:

Year	Cash Flow	Profit
1	50,000	10,000
2	60,000	20,000
3	80,000	30,000
4	90,000	40,000
5	100,000	50,000

Requirements:

a. Explain the difference between relevant costs and sunk costs in investment appraisal. b. Compare the Internal Rate of Return (IRR) and the Net Present Value (NPV) methods. c. Using the information provided:

• Calculate the payback period for the equipment.
• Calculate the NPV and advise whether A. T. Industries should invest in the equipment.
• Determine the accounting rate of return (ARR) for the equipment.