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A construction company Y is considering to participate in the tendering process for building a toll bridge. The duration of the construction project is 5

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A construction company Y is considering to participate in the tendering process for building a toll bridge. The duration of the construction project is 5 years. The successful tenderer is allowed to collect toll from the bridge users after the completion of the project and subsequently will be responsible for maintaining the bridge. The expected cash flow transactions from this project are as follows: Receive bank loan of RM10,000.000 now Annual material expenses of RM200,000 in year 1 and expected to increase by RM20,000 per year until year 5 Annual bridge maintenance cost of RM70,000 from year 6 until end of bridge life Annual bank loan payment of RM2,000,000 starting from the first year until at the end of year 10 Progress payment received from the government: RM4.000.000 (end of year 3) and RM8.000.000 (end of year 5) Toll revenue of RM120.000 per year from year 6 until year 10 a) Construct cash flow diagram to summarize the above transactions. b) Another company is interested in this project and is willing to buy over this project worth RM20,000,000 now. Should this offer being accepted? Show all your calculations and assume the growth rate is 12% per year. A construction company Y is considering to participate in the tendering process for building a toll bridge. The duration of the construction project is 5 years. The successful tenderer is allowed to collect toll from the bridge users after the completion of the project and subsequently will be responsible for maintaining the bridge. The expected cash flow transactions from this project are as follows: Receive bank loan of RM10,000.000 now Annual material expenses of RM200,000 in year 1 and expected to increase by RM20,000 per year until year 5 Annual bridge maintenance cost of RM70,000 from year 6 until end of bridge life Annual bank loan payment of RM2,000,000 starting from the first year until at the end of year 10 Progress payment received from the government: RM4.000.000 (end of year 3) and RM8.000.000 (end of year 5) Toll revenue of RM120.000 per year from year 6 until year 10 a) Construct cash flow diagram to summarize the above transactions. b) Another company is interested in this project and is willing to buy over this project worth RM20,000,000 now. Should this offer being accepted? Show all your calculations and assume the growth rate is 12% per year

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