(a)	After spending RM2 million on R&D, BMT Company has successfully developed a better water filter, called the Super Healthy Water Filter (SHWF). The project requires an initial investment in plant and equipment of RM6 million. The investment will be fully depreciated on a straight-line basis over a 5-year period. At the end of the project, the equipment is estimated to be 10% of next year's forecasted sales. Selling price is RM4 each and production cost is estimated at RM1.5 each. The firm pays at 30% and required return on the project is 12%. Given the following forecasted units sales below, calculate the NPV of the project.
	Year	0	1	2	3	4	5
	Sales (millions of units)	0	0.5	0.6	1.0	1.0	0.6
	Solution:
(b)	Briefly explain the following terms in relation to making investments with the Net Present Value (9 marks):
	(i) Sunk Cost
	Solution:
	(ii) Incremental cash flows
	Solution:
	(iii) Equivalent annual costs
	Solution: