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Fawaz Sdn. Bhd. plan to launch a new product line with an initial investment of RM 1.5 million and annual maintenance costs of RM 105,000.

Fawaz Sdn. Bhd. plan to launch a new product line with an initial investment of RM 1.5 million and annual maintenance costs of RM 105,000. Annual operating cost will be proportionalto the level of production at RM 22.50 per unit, and each unit of product can be sold for RM 150.00. The project has a life of five years with no salvage value. (a) Determine the level of production required if the company is expected to have a payback period of 3 years. (10 Marks) (b) Evaluate the viability of the project using breakeven point analysis. Assume a straight-line depreciation with an effective tax rate of 40% and an after-tax MARR of 10%. Justify your answer. (15 Marks)

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