Question 2 Not yes answered Marked out of 30.00 Flag question a) Briefly discuss the THREE (3) important aspects that the ideal evaluation technique should consider in making evaluation of a project. (12 marks) b) The SAAB Construction Bhd. is considering the purchase of a new machine to replace an obsolete one. The old machine was purchased 10 years ago at cost of RM15,000. The machine had an expected life of 15 years at the time it was purchased. The salvage value will be zero at the end of 15-year life. The machine is being depreciated on a simplified straight-line depreciation method. The old machine's current market value is RM2,000. If the new special purpose machine is acquired, the old machine will be sold to another construction company. The manager reports that a new special purpose machine can be purchased for RM20,000 (including freight and installation). The machine has an expected life of 5 years and it will reduce labor and raw materials usage sufficiently to cut annual operating cost from RM14,000 to RM9,000. Net working capital requirement will also increase by RM2,000 at the time of replacement. The new machine will be depreciated using the simplified straight-line depreciation method. It is estimated that the new machine can be sold for RM4,000 at the end of year 5. Assume the corporate tax rate is 28% and project's cost of capital is 8% Should the new machine be purchased? Justify your answer by using relevant calculations based on the Net Present Value (NPV) evaluation technique. Briefly explain why you choose NPV evaluation technique instead of other technique of evaluation. (18 marks)