Rahman Corporation Berhad is considering an investment to purchase a new machine to produce car spare parts. The required rate of return from investment is 12%. The company has an incremental tax rate of 28%. The spare parts would be manufactured in a vacant building owned by the firm. The vacant building and the land can be sold for RM1,000,000 after taxes. The cost of the machine is RM200,000. The machine has an estimated market value at the end of 5 years of RM50,000. The plant and machinery is depreciated by 25% per year using reducing balance method. Production by year during the 5-year of the machine is expected to be 10,000 units, 12,000 units, 12,000 units, 15,000 units and 10,000 units. The price of spare parts in the first year will be RM100. The price will increase at 2% per year. First-year production costs will be RM50 and grow at 3% per year. Management determines that an immediate (year 0) investment in working capital of RM100,000 is required. Net working capital at the end of year 1-5 is expected to be RM120,000, RM150,000, RM250,000, RM200,000 and RMO. Evaluate the capital investment project and give recommendation about the feasibility of investing in the project. Rahman Corporation Berhad is considering an investment to purchase a new machine to produce car spare parts. The required rate of return from investment is 12%. The company has an incremental tax rate of 28%. The spare parts would be manufactured in a vacant building owned by the firm. The vacant building and the land can be sold for RM1,000,000 after taxes. The cost of the machine is RM200,000. The machine has an estimated market value at the end of 5 years of RM50,000. The plant and machinery is depreciated by 25% per year using reducing balance method. Production by year during the 5-year of the machine is expected to be 10,000 units, 12,000 units, 12,000 units, 15,000 units and 10,000 units. The price of spare parts in the first year will be RM100. The price will increase at 2% per year. First-year production costs will be RM50 and grow at 3% per year. Management determines that an immediate (year 0) investment in working capital of RM100,000 is required. Net working capital at the end of year 1-5 is expected to be RM120,000, RM150,000, RM250,000, RM200,000 and RMO. Evaluate the capital investment project and give recommendation about the feasibility of investing in the project