a)A project requires an initial investment in equipment of RM90,000 and then requires an initial investment in working capital of RM10,000 (at t = 0). You expect the project to produce sales revenue of RM120,000 per year for three years. You estimate manufacturing costs at 60% of revenues. (Assume all revenues and costs occur at year-end, i.e., t = 1, t = 2, and t = 3.) The equipment depreciates using straight-line depreciation method over three years. At the end of the project, the firm can sell the equipment for RM10,000 and also recover the investment in net working capital. The corporate tax rate is 30 percent and the cost of capital is 15%.

i.Calculate the NPV of the project.

ii.What is the NPV of the project if the revenues were higher by 10 percent and the costs were 65 percent of the revenues?