Healthy Food Inc. is considering switching its manually operated machine with a new automated machine. Although the existing unit has 5 more years of service life, its operating costs are fairly high compared to its revenue. The new automated machine costs RM2.5 million. An additional RM100,000 is needed for transportation and installation. The new machine is expected to generate incremental revenues of RM2 million with an incremental overhead cost of RM700,000 per year. It will be depreciated over 5 years to a salvage value of RM200,000.

(a) If the firm's cost of capital is 12%, calculate the following:

(i) Payback period

(ii) Net Present value