Sludge Factory is planning to change its manually operated machine with a new

computerised machine.

The new computerised machine would cost RM$2\mathrm{.}3$ million with a salvage value of

RM$300,000$ at the end of the fifth year. The new machine would generate annual cash

inflows of RM$700,000.$

Required:

With a cost of capital of $12\%,$ calculate the following:

$($a$)$ Payback period.

$($b$)$ Net present value.

$($c$)$ Internal rate of return.

$($d$)$ Advise the management whether the old machine should be replaced or not. Give

reasons for your answer.help