Question
Mr. Danial Daud is the owner of Radial Manufacture Sdn Bhd that supplies the equipment to public schools in Klang Valley and he is considering
Mr. Danial Daud is the owner of Radial Manufacture Sdn Bhd that supplies the equipment to public schools in Klang Valley and he is considering to expand his product line under three projects: stationary, uniform and furniture. The following is the information of cash flows for uniform:
Stationary will generate cash of RM56,708 annually for six years and furniture will generate annual cash of RM39,099 for eight years. The initial outlay for stationary, uniform and furniture are RM278,050, RM122,000 and RM230,900 respectively. The required rate of return for uniform and furniture are 7 percent, while stationary is 5 percent.
Based on the information above, calculate:
i. Net present value for each project and indicate which project should be accepted with a reason.
ii. Internal rate of return for stationery and furniture.
Year 1 WN - Cash Flow RM50,000 RM40,000 RM30,000 RM10,000 RM6,700 4 5Step by Step Solution
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