Megah Berhad is the leading infrastructure developers in the country. Being a

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nation building corporation, Megah Berhad has been invited by the Kuala Selangor

District Council to develop a 39.8 hectors new housing project in Puncak Alam.

The total initial investment stands at RM300,000. The total funding will be sourced

by the Megah Berhad through a private funding organized by CIMB Bank Berhad.

The construction is expected to cause an additional funding (tips: cash outflow) of

RM40,000 in the first year and RM20,000 in the second year. The cash inflow of

RM250,000 at the end of year 3, RM225,000 at the end of year 4, RM210,000 at

the end of year 5. Year 6 will be RM180,000. Lastly, RM100,000 in the final year.

The cost of funding for the housing project in Puncak Alam stands at 9 percent of

interest annually. Corporate tax stands at 30%. Ignore depreciation. Megah

Berhads investment committees has set an investment policy of payback period

not exceeding 5.5 years.

a. Compute payback period for the housing project in Puncak Alam