Sour Grape Corporation is planning to purchase a RM450,000 machine with an economic life of five years. The machine will be fully depreciated over five years using straight-line method, after which it can be sold at RM40,000. The machine will replace four employees whose combined annual salaries are RM160,000. The corporate tax rate is 20 percent and the discount rate is 9 percent.

1. What is the relevant cash flow in year 0 (initial outlay)?
2. Calculate the relevant annual level cash flows from year 1 to year 5.
3. What is the relevant terminal value at year 5 from disposing the machine?
4. Calculate the Payback Period of the machine purchase.
5. Calculate the NPV of the machine purchase.
6. Should the company proceed with its plan? Explain your answer. What other factors the company need to take into consideration?

QUESTION 2

Strong Corporations stock is traded in a stock market whereby the market risk premium is 5 percent and the return of risk-free asset is 2.7%. If the required rate of return of the stock is 12 percent, calculate and interpret the stocks Beta.

Kindly provide the answer in Excel with the formular. Please no ChatGBPT answer.