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ASAP PLZ QUESTION 5 MFL Berhad is considering to replace their existing machine with a more advanced machine. From their survey, they identified two potential

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ASAP PLZ

QUESTION 5 MFL Berhad is considering to replace their existing machine with a more advanced machine. From their survey, they identified two potential machine that could potentially help to improve their operating profit. MFL Berhad hires Bruce as their financial consultant. After carefully studying the options, Bruce come out with the following expected cash flows for two machines: Year 0 Year 1 Year 2 Year 3 Year 4 Machine A Cash Flows (50,000) 10,000 20,000 40,000 10,000 Machine B Cash Flows (75,000) 25,000 25,000 20,000 20,000 Bruce believes that the company is having a cost of capital of 10%. Help Bruce to calculate and recommend which machine should be selected under the following capital budgeting techniques: a) Payback Period (7 marks) b) Discounted Payback Period (8 marks) c) Net Present Value (5 marks) [TOTAL: 20 MARKS] 4

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