$\begin{array}{cc}4& \text{S}\text{e}\text{c}\text{t}\text{i}\text{o}\text{n}1\text{:}\text{P}\text{r}\text{o}\text{j}\text{e}\text{c}\text{t}\text{E}\text{v}\text{a}\text{l}\text{u}\text{a}\text{t}\text{i}\text{o}\text{n}(Excel)\end{array}$

This is the scenario used for Q$1-$Q$5$

An insurance company is considering setting up a branch in a country in which it has not previously operated. The

company is planning to exit the project after $20$ years $(3$ year R&D and $17$ years operation$).$ The following

$6$ cashflows are generated during the development and operation of the branch.

Borrowed Capital: To start the business, the company put in RM$950,000,$ that is borrowed from a bank at the rate

of $4\mathrm{.}0\%$ per annum. At time $2,$ they borrow another RMO,$000$ and inject it into the business, at the same interest

$7$ rate

Only at $t=3,3$ years after the first capital injection, the stores are open to the customer. The following are $2$ main

operating expenses incurred, which started only when the stores open:

RENTAL: RM$25,000$ per annum paid at the END of the year since store launch. The annual rental increases each

year by $2\%$ per annum due to inflation

$8$

SALARY: Staff salary are paid monthly in arrears. The monthly payment in each year is level with total annual

$9$ salary of RM$300000$ every year.

$10$ INCOME: $1)$The company expects the sale of products to produce an income with annual amount of RM$530,000.$

At every date income is received, $150,000$ pays borrowed capital and remainder of net income will be reinvested in

reinvestment fund earning $3\%$

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