4. a. MS Tech has the opportunity to team up with MIT Semiconductor Pte Ltd of Singapore to supply semiconductor process tools. In this three-year project called MS-MIT JV, the required investment outlay from MS Tech is RM8.56 million. The companys hurdle rate is equal to the 2020 WACC attained in the earlier question. The projected cash flows for MS Tech from Day 1 until the end of Year 3 are presented to you as below:

Day 1 RM000

End of Year 1 RM000

End of Year 2 RM000

End of Year 3 RM000 MS-MIT JV (8,560) 13,760.4 11,528.6 10,579.5 i. Determine the Internal rate of return (IRR) for the MS-MIT JV project. Show your workings. (2 marks) ii. Determine the Net Present Value (NPV) for the MS-MIT JV project. Show your workings. (2 marks) iii. Determine the Profitability index (PI) for the MS-MIT JV project. Show your workings. (2 marks) iv. Determine the Payback period (PP) for the MS-MIT JV project. Show your workings. (2 marks) b. MS Tech has another opportunity to grow its light emitting diode (LED), fibre and sensor product portfolio. In this three-year project called LED 2020, the required investment outlay from MS Tech is RM10.2 million. The companys hurdle rate is equal to the 2020 WACC attained in the earlier question. The projected cash flows for MS Tech from Day 1 until the end of Year 3 are presented to you as below:

Day 1 RM000

End of Year 1 RM000

End of Year 2 RM000

End of Year 3 RM000 LED 2020 (10,200) 50,000 50,000 50,000 i. Determine the Internal rate of return (IRR) for the LED 2020 project. Show your workings. (2 marks) ii. Determine the Net Present Value (NPV) for the LED 2020 project. Show your workings. (2 marks) iii. Determine the Profitability index (PI) for the LED 2020 project. Show your workings. (2 marks) iv. Determine the Payback period (PP) for the LED 2020 project. Show your workings. (2 marks)

c. i. Based on your assessments in (a) and (b) above, determine which project(s) that you would endorse for your company to commit, if the projects are independent and the selection criteria is based on IRR. Give reason to your decision. (2 marks) ii. Based on your assessments in (a) and (b) above, determine which project(s) that you would endorse for your company to commit, if the projects are mutually exclusive and the selection criteria is based on IRR. Give reason to your decision. (2 marks) iii. Based on your assessments in (a) and (b) above, determine which project(s) that you would endorse for your company to commit, if the projects are independent and the selection criteria is based on NPV. Give reason to your decision. (2 marks) iv. Based on your assessments in (a) and (b) above, determine which project(s) that you would endorse for your company to commit, if the projects are mutually exclusive and the selection criteria is based on NPV. Give reason to your decision. (2 marks) v. Based on your assessments in (a) and (b) above, determine which project(s) that you would endorse for your company to commit, if the projects are mutually exclusive and the selection criteria is based on PI. Give reason to your decision. (2 marks) vi. Based on your assessments in (a) and (b) above, determine which project(s) that you would endorse for your company to commit, if the projects are independent and the selection criteria is based on PP. Your target payback period is 0.5 year. Give reason to your decision. (2 marks) vii. Based on your assessments in (a) and (b) above, determine which project(s) that you would endorse for your company to commit, if the projects are mutually exclusive and the selection criteria is based on PP. Your target payback period is 0.5 year. Give reason to your decision. (2 marks)