QUESTION 4 (21 marks) Fitrah Perkasa Bhd has been offered a seven-year contract to haul munitions to the government. Since the contract would represent new business, the company would have to purchase several new heavy-duty trucks at a cost of RM350,000 if the contract were accepted. Other data relating to the contract follow: avy-duty truck present new busintact to haul Annual net cash receipts (before tax) from the contract.......... Cost of replacing the motors in the trucks in four years... Salvage value of the trucks at termination of the contract...... ..RM105,000 ..RM 45,000 ..RM 18,000 With the motors being replaced after four years, the trucks will have a useful life of seven years. The company will sell several old and fully depreciated trucks for a total selling price of RM 16,000 in order to raise money to purchase the new truck. The company requires a 16% after-tax return on all equipment purchases. The tax rate is 30%. For tax purposes, the company computes depreciation deduction assuming zero salvage value and using straight- line depreciation. The new trucks would be depreciated over five years. You are required: Compute the net present value of this investment opportunity. Would you recommend that the contract be accepted? Explain your answer, (21 marks)