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Bunga Cengkih Berhad is estimating the outcome of a project as follows: Item Value Selling price RM50 Variable cost RM30 Fixed cost RM300,000 Expected sales

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Bunga Cengkih Berhad is estimating the outcome of a project as follows: Item Value Selling price RM50 Variable cost RM30 Fixed cost RM300,000 Expected sales 30,000 unit per year You are aware that some of these estimations are subjects to error. Suppose that each variable may turn out to be either 10% higher or 10% lower than the initial estimation. The project will last for 5 years and requires an initial investment of RM500,000 which will be depreciated straight line over the project life to a zero-salvage value. Firm's tax rate is 21% and the required rate of return is 12%. From the above information you are required to answer the following questions. a. Calculate the Net Present Value (NPV) by showing Cash Flows analysis for this project. at worst-case, base-case scenario and best-case scenario. (3 Marks) b. Based on your calculation in base-case scenario, perform a sensitivity analysis on the selling price, variable cost and fixed cost. (3 Marks) C. Interpret your findings in part (a) and (b). (4 Marks) (Total: 10 Marks)

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