21. Cosmo Plant Engineering Limited is planned to purchase a machine for $1,480,000. It has an estimated life of 6 years. It is estimated that the machine's operating and maintenance cost is amounted to $8,500 per year and a part-time operator will be employed at a wage of $66,000 in the first year. The inflation for operating and maintenance cost and staff cost escalation is 8% p.a. and 10% p.a. respectively. Cosmo is expected to generate profit by producing 120,000 Product X per year in the first 3 years, 140,500 in the 4th \& 5th year and 100,000 in the 6th year. The selling price and raw material cost for each product is $15.5 and $5.6 respectively. The machine has a scrap value of $120,000 at the end of the 6th year. (a) Prepare a table to show the cash flow structure of the project. ( 8 marks) (b) Calculate the Net Present Value (NPV) of the project if the cost of capital at 8%. (7 marks) (c) Based on your calculation, suggest if this is a good investment. (2 marks) 21. Cosmo Plant Engineering Limited is planned to purchase a machine for $1,480,000. It has an estimated life of 6 years. It is estimated that the machine's operating and maintenance cost is amounted to $8,500 per year and a part-time operator will be employed at a wage of $66,000 in the first year. The inflation for operating and maintenance cost and staff cost escalation is 8% p.a. and 10% p.a. respectively. Cosmo is expected to generate profit by producing 120,000 Product X per year in the first 3 years, 140,500 in the 4th \& 5th year and 100,000 in the 6th year. The selling price and raw material cost for each product is $15.5 and $5.6 respectively. The machine has a scrap value of $120,000 at the end of the 6th year. (a) Prepare a table to show the cash flow structure of the project. ( 8 marks) (b) Calculate the Net Present Value (NPV) of the project if the cost of capital at 8%. (7 marks) (c) Based on your calculation, suggest if this is a good investment. (2 marks)