Marwan Global LLC is evaluating the purchase of a new apparatus to produce product X, which has a short product lifecycle due to rapidly changing technology. The machine is expected to cost Omani Rials 3,500,000. The estimated figures for production and sales of product P are as follows:

Particulars	Year 1	Year 2	Year 3	Year 4
Production and Sales (Units)	60000	75000	135000	60000

Marwan Global LLC pays tax of 35% per year in the year in which the taxable profit occurs. Liability to tax is reduced by tax allowable depreciation on machinery, which Marwan Global LLC can claim on a straight-line basis over the four-year life of the proposed investment. The new machine is expected to have no scrap value at the end of the four year period. Marwan Global LLC uses a nominal (money terms) after-tax cost of capital of 14% for investment appraisal purposes.

The selling price of product X is Omani Rials 25 per unit, while the variable cost of the product is Omani Rials 14 per unit. Selling price inflation is expected to be 4% per year and variable cost inflation is expected to be 5% per year. No increase in existing fixed costs is expected since Marwan Global LLC has spare capacity in both space and labour terms.

Producing and selling product X will call for increased investment in working capital. Analysis of historical levels of working capital within Marwan Global LLC indicates that at the start of each year, investment in working capital for product X will need to be 5% of sales revenue for that year.

Required

(a) Calculate the net present value (NPV) and internal rate of return (IRR) of the proposed investment in the new apparatus.

(b) Advise on the acceptability of the proposed investment in the new apparatus