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( a ) Crystal Water, a community committed to raise awareness towards water pollution in big cities, permission approved to install CCC an innovation water

(a) Crystal Water, a community committed to raise awareness towards water pollution in big cities, permission approved to install CCC an innovation water cleaning device. Administrative costs to obtain the permission were RM1,000 and were incurred in the previous year.
The device, that will be acquired and installed today, costs RM10,000 with annual operating expenses of RM3,000 and is expected to operate for two years. It will be depreciated in four years using the straight-line depreciation method. The salvage value before taxes of the device will be RM6,000 two years from now.
The total waste collected over a year can be recycled and sold at RM8,000(revenues). Working capital is 10% of next year revenues. The discount rate is 10% and the marginal tax rate is 30%.
Calculate the projects;
(i) Free cash flow from year 0 to 2.
(11 marks)
(ii) Net present value (NPV).
(4 marks)

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