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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 ... blur-text-image

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