Question 2 BersamaMU Berhad is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by Mr Zill, a recently graduated finance major The production line would be set up in unused space in BersamaMU's main plant 00; another RM10,000 ditional RM30,000 to The machinery's invoice price would be approximately RM200,0 in shipping charges would be required: and it would cost an ad nstalil the equipment. Further, the firm's inventories would have to be increased by RM25,000 to handle the new line, but its accounts payable would rise by RM5,000. The machinery has an economic life of 4 years, and BersamaMU has obtained a special tax ruling which places the equipment in the MACRS 4-year class. The machinery is expected to have a salvage value of RM25,000 after 4 years of use The new line would produce incremental unit sales of 1,250 at a price of RM200 in each of the next four years. Incremental cash operating costs would equal 50 percent of the new line's gross revenue. Therefore, incremental operating profit, before depreciation and taxes, would equal RM125.000 in each of the next four years. The firm's tax rate is 40 percent, and its overali weighted average cost of capital is 10 percent