CAPITAL BUDGETING.

Sunnie Corporation, plans to expand its business by constructing another building which will cost 10 million pesos with a scrap value of 10% of its cost after 10 years of useful life. It is estimated that for the first 5 years it will earn 2,000,000 pesos every year and for the last 5 years it will earn 1,000,000 pesos every year. If the firm borrows money from the bank, it will cost them 10% per annum discounted every year. Evaluate the project and tell us if it will be accepted or not according to the following evaluative criteria:

1. Accounting Rate of Return (ARR)

2. Payback Period (PP)

3. Net Present Value (NPV)

4. Profitability Index (PI)

5. Internal Rate of Return (IRR)

Answer whether ACCEPT or REJECT after every final answer.