ABC Inc. is considering investing in new equipment for the manufacture of Blue Ink. The new equipment will cost $1,000,000, will provide annual cost savings of $200,000 per year for eight years and is expected to be sold for $300,000 at the end of its useful life. The company requires a 12% return on its investments.
1. Calculate the Return on Investment on the project
2. Calculate the internal rate of return (IRR) on the project