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QUESTION 4 Penchana Packaging Berhad is a company that supplies packaging services. The company is considering the purchasing of new packaging machine worth RM 9
QUESTION
Penchana Packaging Berhad is a company that supplies packaging services. The
company is considering the purchasing of new packaging machine worth RM The
new machine will include the installation cost of RM and transport cost of RM
The new machine has a live of five years and will depreciate to zero using the straight
line method.
The machine is expected to generate sales of RM per years and will save
RM per year in salary cost, but the maintenance costs will increase by RM per
annum. Upon buying the machine, the inventories will increase by RM and account
payable will increase by RM The depreciation of machinery is going to be
RM per year and the tax rate is percent while the discount rate for capital
budgeting is percent.
Based on the information given, calculate the below.
a Calculate the project's initial outlay.
Marks
b Calculate the Net Present Value NPV of the proposed project.
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c Determine if Penchana Packaging Berhad should proceed with the plan.
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d Calculate the payback period.
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e Calculate the discounted payback perid
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Total: Marks
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