Question No. 2 (4 marks x 5=20) Renaissance Retrofitting and Upgradation Industries Ltd (RRUI-KA) is well-known for providing upgradation and retrofitting services of traditional as well as CNC lathe, milling, and other machines. The company intends to construct a new machine upgradation facility for which following two mutually investment proposals i.e., project A and Bare are found technically feasible. Now you are required to examine both of these projects and provide financial and economic feasibility. The initial cash out flows, and yearly savings before depreciation (revenues) of both projects are given below. 1 3 4 5 6 7 B Years Project Investment 2 A -28.000 yearly savings before depreciation (A)8,000 8,000 8,000 8,000 8,000 8,000 8,000 -20,000 yearly savings before depreciation (B)5,000 5,000 6,000 7,000 7,000 7,000 7,000 Additional Information The weighted average cost of capital (WACC) of the firm is 14 %, the company follows MACRS and 5 years property class. The tax rate is 34 %. MACRS 5 Years is given below. MACRS Fixed Annual Expense Percentages by Recovery Class Year 1 2 3 5-Year 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% 4 5 6 Required You are required to calculate the following. 1. Net Present Value (NPV) 2. Payback Period (PBP) 3. Internal Rate of Return (IRR) Profitability index and 4. report that according to each project evaluating technique which project is acceptable