Question 7 Glab operates an online taxi booking service. As a result of technical advances in technology, the existing servers have to be replaced. The company decided to come up with two competing projects. Project 1 is a booking service via the web while the Project 2 is a booking service via mobile. The company wanted the cash flow of both projects to be tracked separately A different technical consultant is hired at a cost of RM 80,000 for each project at the start of the project in 2021 The details of each system are as follows: Project 1 Project 2 RM Initial investment 600,000 800,000 Residual value 60,000 50.000 Contribution per annum 580,000 600,000 Fixed maintenance costs per amum 20,000 40,000 Other fixed operating costs per annum 360,000 305,000 Estimated useful life 3 years 5 years RM The maintenance costs are payable annually in advance. All other cash flows apart from the initial investment should be assumed to occur at the end of each year. Depreciation has been calculated using the straight line method and has been Included in other fixed operating costs. All excess cash will be sent to the current account of the holding company, The company will loan cash funds from their current account if there is a shortfall of cash for the year At the end of each year, the project will have no cash balances Required: Prepare a separate cash budget each of the projects covering 2021 to 2026. [30 marks] Question 7 Glab operates an online taxi booking service. As a result of technical advances in technology. the existing servers have to be replaced. The company decided to come up with two competing projects. Project 1 is a booking service via the web while the Project 2 is a booking service via noble. The company wanted the cash fow of both projects to be tracked separately, A different technical consulant is hired at a cost of RM 30,000 for each project at the start of the project in 2021 The details of each system are as follows: Project 1 Project 2 RM RM nitial investment 600.000 800,000 Residual value 60,000 50,000 Contribution per annum 580.000 600,000 Fixed maintenance costs per annum 20.000 40,000 Other fixed operating costs per annum 360,000 305.000 Estimated useful ste 3 years 5 years The maintenance costs are payable annually in advance. All other cash flows apart from the initial investment should be assumed to occur at the end of each year. Depreciation has been calculated using the straight line method and has been included in other fored operating costs All excess cash will be sent to the current account of the holding company. The company will loan cash funds from their current account if there is a shortfall of cash for the year. At the end of each year, the project will have no cash balances Required: Prepare a separate cash budget each of the projects covering 2021 to 2026. 130 marks)
