Sydney Harbor Inc.

Sydney Harbor Inc. is evaluating the following project's proposal:

The project cost is RM$3\mathrm{.}5$ M$,$ with additional fixed asset purchase of RM$0\mathrm{.}5$M$.$

The operating cash flows of the project are as follows:

Year

$1$ RM $1,750,000\mathrm{.}00$

$2$ RM $1,800,000\mathrm{.}00$

$3$ RM $2,500,000\mathrm{.}00$

$4$ RM $1,500,000\mathrm{.}00$

$520\%$ of the project cost

At the termination of the project, $40\%$ of the fixed asset cost is to be recovered $.$ The company's cost of capital is $5\mathrm{.}14\%$ p$.$a$.$

Based on Capital Budgeting Techniques,