Question: 14. A new project is being planned for a study period of 8 years. It will require P250,000 for the start-up and after the

14. A new project is being planned for a study period of 8 years. It will require P250,000 for the start-up and after the

14. A new project is being planned for a study period of 8 years. It will require P250,000 for the start-up and after the end of the first year, P13,500 shall be paid for its innovation. The board then requires to add another modified technology which will cost P25,000 by the end of the second year. After the end of third year, the project will start to earn P57,500 annually. Calculate the annual effective interest rate using ERR Method if the interest rate external to this project () is 13.75%. 15. From number 14, if MARR is equal to 5%, how would you describe the project? A. The project is justifiable since IRR is less than MARR. B. The project is NOT justifiable since IRR is less than MARR. C. The project is justifiable since IRR is greater than MARR. D. The project is NOT justifiable since IRR is greater than MARR.

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