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ABC company is planning to purchase a machine to increase its current production. The machine costs RM2,575,000, and 30% of the purchase price can be

ABC company is planning to purchase a machine to increase its current production. The machine costs RM2,575,000, and 30% of the purchase price can be recovered in year 5. The expected operating cash flow (OCF) of the machine is as follows:

Year

OCF

(RM)

1

1,825,000

2

2,775,000

3

1,630,000

4

1,235,000

5

1,200,000

The companys cost of capital is 5.82%. Assess the viability of the purchase based on Capital Budgeting Techniques.

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