Question
Suka- Suka company is looking to invest in one of the new machine and the cost of the machine is RM 65,000 including installation cost.
Suka- Suka company is looking to invest in one of the new machine and the cost of the machine is RM 65,000 including installation cost. By investing in this project, Suka- Suka Limited Company expected to receive net income as below:
Year | Net Income |
1 | RM 18,000 |
2 | RM 22,000 |
3 | RM 25,000 |
4 | RM 30,000 |
5 | RM 35,000 |
Required: The required rate of return is 10%
Calculate Net Present Value from that operating cash flow.
Calculate the Payback period.
Calculate discounted payback period.
As a corporate finance manager, do you still want to proceed with this investment? Why?
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ANSWER AND EXPLANATION Net Present Value Year 0 Cost of the Machine 65000 Year 1 180001101 RM1636364 ...Get Instant Access to Expert-Tailored Solutions
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Investments An Introduction
Authors: Herbert B Mayo
9th Edition
324561385, 978-0324561388
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