Question
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.
question :
a) Terminal Value in Year 5 is RM ?
b) Total PV of the cash flow is RM
c) The Discounted Payback Period is
d) The Net Present Value (NPV) is RM
e) The Profitability Index is
f) The Internal Rate of Return (IRR) is ________%.
g) The Modified Internal Rate of Return is _________%.
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