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Lemon Berhad is considering the purchase of a new machine, which will cost RM220,000, plus an additional RM8,500 to ship and install. The new machine
Lemon Berhad is considering the purchase of a new machine, which will cost RM220,000, plus an additional RM8,500 to ship and install. The new machine will have a 5-year useful life and will be depreciated to zero using the straight-line method. With the new machine, Inventory will increase by RM14,000 and Payables will increase by RM5,000. The working capital will recover aterminal year. The machine is expected to generate new sales of RM40,000 per year and is expected to save RM20,000 in labor and electrical expenses over the next 5-years. The machine is expected to have a disposal value of RM35,000. Lemon Berhad uses a 6% discount rate for capital budgeting purposes and the firm's income tax rate is 28%. What is the machine's NPV
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