b) Mercun Company purchased a machine 5 years ago at a cost of RM90,000. The machine had an expected life of 10 years at the time of purchase, and it is being depreciated by the straight-line method by RM9,000 per year. If the machine is not replaced, it can be sold for RM10,000 at the end of its useful life.

A new machine can be purchased for RM150,000, including installation costs and its expected life is 10 years. During its 5-year life, it will reduce cash operating expenses by RM50,000 per year. Sales are not expected to change. At the end of its useful life, the machine is estimated to be worthless. Straight line depreciation method will be used.

The old machine can be sold today for RM55,000. The firm's tax rate is 35%. The appropriate weighted average cost of capital (WACC) is 16%.

(I) If the new machine is purchased, Calculate the initial cash flow at year 0?

(ii) Calculate the incremental net cash flows that will occur at the end of Year 1 through 5?