Globe Xcell Berhad is a company based in Kuala Lumpur specialising in minting gold and silver coins. The gold and silver coins are demanded for savings purposes, payment of zakat (a transfer of wealth to certain groups of people, i.e. from the rich to the poor) and marriage dowry. The demand for gold and silver coins is increasing and the company cannot fulfill the demand from its existing minting production facility.

To meet the increasing demand, Globe Xcell berhad is currently attempting to select the best minting machines which are competing for the firms fixed capital budget of RM1 million. Currently the company is presented with mutually exclusive machines imported from the United Arab Emirates and Bahrain.

The cost of capital is approximately 10%. A summary of key data about the proposed machines is as follows:

Year/Machine Imported UAE (RM) Bahrain (RM) 0 1,000,000 1,000,000 1 250,000 500,000 2 250,000 300,000 3 250,000 300,000 4 250,000 250,000 5 250,000 150,000

Required:

Calculate the payback period, NPV and IRR for each machine. The firm required 3 years to accept the machine. (10 marks) (CLO2:PLO6:C4)

Evaluate the result from (a). (2 marks) (CLO2:PLO6:C6)