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Digital Technology Sdn Bhd manufactures microchips. The company is facing a sudden surge in demand for microchips in January 2022. The company is considering investing

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Digital Technology Sdn Bhd manufactures microchips. The company is facing a sudden surge in demand for microchips in January 2022. The company is considering investing in an additional state-of the art testing facility to cater for the increase in the production of microchips to meet the increasing demand locally and overseas. The following information has been compiled on the new testing facility: RM Investment cost for the new facility 8: equipment 160,000 Cost of installation and commissioning 90,000 Annual expected cash inow (revenue) 75,000 Annual expected cash outow (expense) 14,000 The testing facility is expected to have a useful life of 10 years with zero salvage value at the end of it) years. The company's policy is to use straight-line deprecation method to depreciate its assets. Digital Technoiogy Sdn Bhd cost of capital is 12%. Income tax rate is 24%. Required: Compute the following: a) The annual after-tax income from the investment. (2 marks) b) The annual after-tax cash ow from the investment. (2 marks) c) Payback period. (1 mark) d) Accounting rate of returns. (1 mark) e) Net present value (NPV) of the investment. (3 marks} f) Approximate Internal Rate of Return for the investment. (2 marks)

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