Mr Andrian is the CEO of Cleopetra Sdn Bhd $($CSB$),$ a company that manufactures cosmetic product lines. Last month, Mr Andrian met with an old friend, who is a plastic surgeon. They discussed the possibility of manufacturing and selling new face cream, which could slow down the ageing process of the skin. Back in his office, Mr Andrian started to make his plan.

The project will require an initial investment of RM$740,000,$ which includes equipment that has an expected useful life of $4$ years, and salvage value of RM$10,000.$ Mr Andrian expects that there will be an additional cost of RM$30,000$ per year, and $12\%$ of cost of capital.

Mr Andrian estimates that CSB$$s cash flow will increase as follows:

Year RM

$1198,000$

$2270,000$

$3324,000$

$4324,000$

REQUIRED:

$($f$)$Calculate the payback period of the new project.

$(3$ Marks$)$

$($g$)$Calculate the accounting rate of return $($ARR$)$ of the new project.

$(3$ Marks$)$

$($h$)$Determine the net present value $($NPV$)$ of the new project.

$(3$ Marks$)$

$($i$)$Determine the internal rate of return $($IRR$)$ for the new project. Use $10\%$ and $14\%$ as discount factors.

$(7$ Marks$)$

$($j$)$Advice Mr Andrian if CSB should proceed with the plan. Provide THREE $(3)$ justifications.