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 firm$$s fixed capital budget of RM$1$ million. Currently the company is presented with mutually exclusive machines imported from the US and Germany.

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

Year$/$Machine Imported US

$($RM$)$ Germany

$($RM$)$

$01,000,0001,000,000$

$1250,000500,000$

$2250,000300,000$

$3250,000300,000$

$4250,000250,000$

$5250,000150,000$

Required:

a$.$ Calculate the payback period, NPV and IRR for each machine. The firm required $3$ years to accept the machine.

$(17$ marks$)$

$($CLO$3$:PLO$7$:C$3)$

ANSWER: Payback: Project US $4$ years; Project Germany $2\mathrm{.}67$ years

NPV: Project US $$RM$52,325$; project Germany RM$191,745$

IRR: Project US $7\mathrm{.}93\%$; Project Germany $18\mathrm{.}87\%$

a$.$ Evaluate the result from $($a$).$

$(3$ marks$)$

Kindly show calculation how to do it with explanation