Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A new chemical plant will be built and requires the following capital investments (all figures are in RM million): Table 1 Cost of land, L=

image text in transcribed

A new chemical plant will be built and requires the following capital investments (all figures are in RM million): Table 1 Cost of land, L= RM 7.0 Total fixed capital investment, FCIL RM 120.0 Fixed capital investment during year 1 = RM 70.0 Fixed capital investment during year 2 = RM 60.0 Plant start-up at end of year 2 Working capital 20% of FCIL (0.20)*(RM140) = RM 28.0 at end of year 2 The sales revenues and costs of manufacturing are given below: Yearly sales revenue (after start-up), R=RM 70.0 per year Cost of manufacturing excluding depreciation allowance (after start-up). COM - RM 30.0 per year Taxation rate, t -40% Salvage value of plant, S-RM 10.0 Depreciation use 5-year MACRS Assume a nroiect life of 10 vears Using the template cash flow (Table 1), calculate each non-discounted profitability criteria given in this section for this plant. 1. Cumulative Cash Position (CCP) ii. Discounted Payback Period (DBPB) Ili . Rate of Return on Investment (ROR) (5) A new chemical plant will be built and requires the following capital investments (all figures are in RM million): Table 1 Cost of land, L= RM 7.0 Total fixed capital investment, FCIL RM 120.0 Fixed capital investment during year 1 = RM 70.0 Fixed capital investment during year 2 = RM 60.0 Plant start-up at end of year 2 Working capital 20% of FCIL (0.20)*(RM140) = RM 28.0 at end of year 2 The sales revenues and costs of manufacturing are given below: Yearly sales revenue (after start-up), R=RM 70.0 per year Cost of manufacturing excluding depreciation allowance (after start-up). COM - RM 30.0 per year Taxation rate, t -40% Salvage value of plant, S-RM 10.0 Depreciation use 5-year MACRS Assume a nroiect life of 10 vears Using the template cash flow (Table 1), calculate each non-discounted profitability criteria given in this section for this plant. 1. Cumulative Cash Position (CCP) ii. Discounted Payback Period (DBPB) Ili . Rate of Return on Investment (ROR)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions