Assume that Peggy works as an administrative executive and earns RM40,000 per year. Now,

she decides to open a Yoga Training Center. To open the center, she needs to rent an office

for RM24,000 per year and spend RM100,000 on labor, materials and other operating

expenses. Calculate the amount of revenue where business should earn in order to break even

based on:

a) Accounting profit approach

b) Economics profit approach

2. Ali works as a Project Manager for DD firm. Recently, he is assigned to handle a two year

investment project that costs RM50,000 today and expected to generate RM100,000 after two

years. The director of DD firm is very concerned about the firm's cash flow problem due to

the 30% per annum interest rate charged by the bank on the firm's two years loan. Do you

think DD firm should undertake the project? Why?

3. The manager of an automation company is considering to purchase three computers, which

will cost RM15,000. the computers are expected to generate profit of RM8,000 each during

the first two years and RM5,000 in the third year. The computers can be resold at the end of

third year for RM3,000. Alternatively, the manager can invest the RM15,000 at a guaranteed

interest rate of 3%. Should the manager purchase the computers or invest the money at a

interest rate of 3%?