The following data are given for the XYZ Company Ltd.:

Initial cost of proposed equipment K75,000

Estimated useful life 6 years

Estimated annual savings in cash operating expenses K18,000

Predicted residual value at the end of the useful life K3,000

Cost of capital 12%

Compute the:

(a) payback period;

(b) NPV;

(c)IRR

(d ) PI and

(e) ARR of the project.

Should XYZ invest in the project? Explain.