BWFF2043 ADVANCE FINANCIAL MANAGEMENT

B. Calculate net present value (NPV) and profitability index (PD) for the project. 1,1410 RM166,181,848 - NPV - (RM1,120,324,377) + RM114,527,184 + 0.14 1.1410 = (RM1,120,324,377) + RM597,387,036.40 + RM44,826,524.75 = - RM478,110,815.90 1 PI - RM114,527,184 1.1410 RM166,181,848 + 0.14 1,1410 RM1,120,324.377 (RM597,387,036.40+RM44,826,524.75) RM1,120,324,377 = 0.57323.0 Calculation for MAS Airlines Berhad A. Based on the information given, Calculate the project's total initial outlay. T = 2; R =14% = (PVIF 14%, 2) = (RM279,000,000 x 2 x 65%) (1.14)2 =RM729,224,377 Initial Outlay RM Cost of new asset (RM279,000,000 x 2 35%) (195,300,000) Training (250,000) Depreciable asset (195,550,000) PV of Balance Cost of Asset (729.224,377) [(65%) T = 1 (PVIF 149%, 1)] Total Initial Outlay (1,120,324,377) ii) Calculate the annual project cash flows. Operating Cost RM Maintenance cost (RM5, 760,000 x 2% x 2) 230,400 Salary: Pilot (RM240,000 x 2% x 2) 9,600 Air crews (RM240,000 x 2% x 2) 9.600 Fuel cost year (RM16,000,000 x 2% x 2) 640,000 Insurance year (RM9,600,000 x 2% x 2) 384,000 Rental (RM200,000 x 2% x 2) 8,000 Total Operating Cost 1,281,600Annual Cash Flow RM Revenue (RM72,900,000 x 2) 145,800,000 Less: Operating Cost (1,281,600) Depreciation (RM195,550,000 / 10) (19,555,000) Earning before Tax (EBT) 124,963,400 Less: Tax (0.24 x RM124,963,400) (29,991,216) Earning after Tax (EAT) 94.972,184 Add: Depreciation reversal 19,555,000 Annual Cash Flow 114,527,184\fiii) Calculate the project's terminal cash flow. Salvage value = (0.20 x RM218,000,240) + (0.30 x RM219,000,420) + (0.35 x RM218,240,240) + (0.15 x RM219,840,460) - RM43,600,048 + RM65,700,126 + RM76,384,084 + RM32,976,069 = RM218,660,327 Terminal Cash Flow RM Salvage value 218,660,327 Less: Tax effect of capital gain (52,478,478) (0.24 x RM218,660,327) Terminal Cash Flow 166.181,848