ABC PLC is considering to manufacture a new product which would involve the use of two machines, one new machine and one existing machine in the business. The purchase price of the new machine will be Rs.200,000. The existing machine was purchased two year ago for Rs.180,000. The current net book value of this machine is Rs.108,000. There is sufficient capacity on this existing machin, which has so far been under-utilized. Annual sales. of the project would be 8,000 units at Rs. 45 per unit. The estimated production cost per unit is as follows. The project would have a five-years life, after five years the new machine would have a net residual value of Rs.10,000. The direct labour is continually in short supply. Hence, labour resources would have to be diverted from other work which currently earns a contribution of Rs.5 per direct labour hour. Working capital requirements would be Rs.10, 000 in the first year, rising to Rs.15,000 in the second year and remaining at this level until the end of the project. the total working capital will be recovered at the end of the useful life of this project. The company's cost of capital is 20%. You are required to assess whether the project is worthwhile. (Ignore taxation.)