Question 3

yasa Bhd is attempting to evaluate the feasibility of investing RM85,000, CF0, in a machine having a 5-year life. The firm has estimated the cash inflows associated with the proposal as shown below. The firm has a 12 percent cost of capital.

End of Year (t)	Cash Inflows (CFt)
1	RM18,000
2	RM22,500
3	RM27,000
4	RM31,500
5	RM36,000

(i)Calculate the payback period for the proposed investment.

(ii)Calculate the Net Present Value (NPV) for the proposed investment.

(iii)Calculate the Internal Rate of Return (IRR) for the proposed investment.

(iv)Evaluate the acceptability of the proposed investment using NPV and IRR. What recommendation would you make relative to implementation of the project? Why?