I MY MAXIS 4G 1:52 AM @ 1 0 61%

MY MAXIS < Back Case 5 1:52 AM 0 61% 5. GROUP PRESENTATION_... Suria Sdn Bhd is considering purchasing a new machine with cost RM450,000. It is expected to have a useful life of 5 years. At the end of the useful life, the machine is expected to have a salvage value of RM 10,000. The company's policy is to provide annual depreciation based on straight line method. The forecasted sales from the project is as follows: Year I - 3 Increase by RMIOO,OOO Year 4 - 5 Increase by RM180,OOO Besides that, the machine will also incur the following projected differential cash flows: Electricity charges Increase by RM60,OOO from year 1 until year 5 Salaries 1 until year 5 Decrease by RM30,OOO from year Manufacturing cost Decrease by RM 50,000 from year 1 until year 3 Decrease by RM 80,000 from year 4 until year 5 The company's tax rate is 25% and the company's cost of capital is 12%. The desired payback period is three years and minimum required accounting rate of return is 20%. Below are iven present value interest factor table: Period 6% 12% 2 3 4 5 0.9434 0.8929 0.8333 0.8900 0.7972 0.6944 0.8396 0.7118 0.5787 0.7921 0.6355 0.4823 0.7473 0.5674 0.4019 Required: Evaluate the investment proposal using various capital investment techniques and briefly explain whether the firm/company should accept or reject the investment proposal.