QUESTION 3 [20 Marks] On 1 March 2020, a company purchased the premises for X amount to open a new bicycle showroom in Kuala Lumpur. To refurbish the premises, the total cost of 1 million will be made in four equal instalments to be paid monthly in advance, with the first payment made on 1 January 2021. The company is expected to open the showroom on 1 July 2021 and the number of bicycles expected to be sold each month is shown in the base sheet of the workbook. Assumed that the price of each bicycle is 4,120 and all the income from the sales are to be collected from the beginning of the month. The costs of operating and maintaining the new showroom will be 20,000 per month, which is to be made at the beginning of the month starting from 1 July 2021 and assumed that these costs would increase by 1.49% monthly, on 1 October every year. At the end of 2032, it is assumed that all costs and income will be terminated. The interest rate is 6.5% per annum compounded quarterly. (a) Find the net present value of the recommended showroom and determine whether the showroom is profitable. (b) Determine the internal rate of return. (c) Find the net present value if the price of bicycles increases by 1.85% at the beginning of each year starting from 1 January 2025. QUESTION 3 [20 Marks] On 1 March 2020, a company purchased the premises for X amount to open a new bicycle showroom in Kuala Lumpur. To refurbish the premises, the total cost of 1 million will be made in four equal instalments to be paid monthly in advance, with the first payment made on 1 January 2021. The company is expected to open the showroom on 1 July 2021 and the number of bicycles expected to be sold each month is shown in the base sheet of the workbook. Assumed that the price of each bicycle is 4,120 and all the income from the sales are to be collected from the beginning of the month. The costs of operating and maintaining the new showroom will be 20,000 per month, which is to be made at the beginning of the month starting from 1 July 2021 and assumed that these costs would increase by 1.49% monthly, on 1 October every year. At the end of 2032, it is assumed that all costs and income will be terminated. The interest rate is 6.5% per annum compounded quarterly. (a) Find the net present value of the recommended showroom and determine whether the showroom is profitable. (b) Determine the internal rate of return. (c) Find the net present value if the price of bicycles increases by 1.85% at the beginning of each year starting from 1 January 2025