a) Cisco Bhd. is contemplating the purchase of a new RM485,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth RM35,000 at the end of that time. The company will save RM140,000 on pre-tax cost and will be able to reduce the working capital by RM60,000. The tax rate is 24 percent. If the required return is 11 percent, calculate the net present value (NPV) for this project.

b) If the pre-tax cost savings dropped to RM120,000, should the company accept the project?