jIKA PLC is considering procuring a new machine costing K$2\mathrm{.}3$ million and is expected to last four $(4)$ years at which it will have an estimated scape value of K$300,000.$ The annual units expected to be produced and sold are $120,000$ units. The projected selling price per unit in the first year is K$24.$The production cost per unit $($at current price$)$ foe materials and labour is K$8$ and K$7$ respectively.

The selling price is expected to increase by $9\%$ annually from year two. Material and labour is expected to increase annually by $7\%$ and $5\%$ respectively. Annual fixed overheads of the company are estimated to amount to K$1$ million after the investment. The management accountant has determined that $10\%$ of these are directly attributed to the investment in the new machine.

The minimum expected rate of return by investors from the project is $10\%.$ The corporate tax is $30\%$ per year.

Required

$($a$)$ Calculate the NPV of the project and advise as to whether or not it should be accepted. $(12$ Marks$)$

$($b$)$ Calculate the Internal Rate of Return of the project and advise as to whether or not it should be accepted. $(7$Marks$)$

$($c$)$ Explain the concept of time value of money in the context of finance. $(6$ marks$)$