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ao and the sellnsidering buying a new machine. The machine cost accounts receivable will increase by RM800,000 and the seiler chare b RM30.000 and aoe
ao and the sellnsidering buying a new machine. The machine cost accounts receivable will increase by RM800,000 and the seiler chare b RM30.000 and aoe machine will gend other RM30,000 and accounts payable will increase by the next 8 years (the life of the machine) the machine will generate annual 00,000. The annual cost of goods sold is RM400,000 per year and other costs ransportation of RM20,000. With the new machine sales of are RM300,000 per year on on the machine is using straight line method over the next 8 years. At the end of e machine salvage value is zero and the firm can sell the machine for RM300,000. 8 years, th The firm's tax rate is 40% and discount rate for projects of this kind is 15%. Required: Caiculate the net present vakue if Limau Bali Trading decided to buy the new machine. (7 Marks) a) Should the firm buy the newmachine? b) In making capital budgeting decisions, why are we interested only in incremental cash (3 Marks) flows rather than total cash flows? Explain. (Total: 10 Marks)
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