Question 24 Prim Rose Berhad is considering the purchase of a new production machine under its expansion programme. It costs RM500,000 and requires installation costs of RM50,000. The old printing machine has zero terminal book value and five years of useful life remaining. It is being depreciated using the straight- line method. It was purchased five years ago for RM250,000, and can be sold today for RM100,000. With the use of the new machine, sales in each of the next five years are expected to increase by RM250,000, and expenses (excluding depreciation) will represent 50% of sales. This new machine will not affect the firm's net working capital requirements. The new machine is estimated to have a useful life of five years with zero salvage value and will be depreciated using the straight-line method. The firm is subject to a 25% tax rate, and its cost of capital is 12%. The desired payback period is five years. Required: Determine the initial outlay and annual after-tax operating cash flows attributable to the new printing machine. b. Compute the following for the new machine: i. Payback period ii. Net present value iii. Internal rate of return Make a recommendation to accept or reject the new printing machine. Justify your answer. a. C