EncikAliwill retire insixyearstime. He wants to open some type of small business operation that can be managed inthefreetimehehasavailablefromhisregularoccupation,butthatcanbeclosedeasilywhenheretires.He is considering several investment alternatives, one of which is to open a self-service laundry. Encik Alihas determined thefollowing facts after some careful researches:

1.Washers, dryers and otherequipment needed would cost RM200,000. In addition, RM22,000 in working capital would be required to purchase an inventory of soap, softener, and related items and to provide changefor change machines. (The soap, softener, and related items would be sold to customers at cost). After six years, the working capital would be released for investment elsewhere.

2.The self-servicewould charge RM6.00use for washers and RM4.00 per use for the dryers. EncikAliexpects the laundrybusinessto gross RM7,200 each week from thewashers and RM6,000each week from the dryers.

3.The only available costs inthe laundry businesswould be 75sen per use for water and electricity for washers and 90senper use of electricity for the dryer.

4.Fixed costs would be RM3,000 per month for rent, RM1,500 per month for cleaning, andRM1,875 per month for maintenance,insurance,and other items.

5.The equipment would have a 10% disposal value in six years.

Encik Aliwill not open the self-service laundryunless it provides at least 12% return. Income tax is ignored in the operation of this business.

i) Compute the expected annual net cash receipt from the operations ofthe businessof Encik Ali. Assumethe self-servicelaundryis opened 52 weeks per year.(3 marks)(CLO3:PLO3:C4)

ii) Compute the net present value of the business.(10marks)(CLO3:PLO3:C4)