the project bulan is rm 54, 000 not rm 54 million

Question 2 a) A firm is considering the following mutually exclusive investment projects. Project Matahari requires an initial outlay of RM500,000 and will provide cash inflow of RM120,000 per year for the next seven years. Project Bulan requires an initial outlay of RM54,000,000 and will provide cash inflow of RM12, 700 in year 1, RM23,200 in year 2. RM27,600 in year 3 and RM46,500 in year 4. The cost of capital is 14% i. Calculate the NPV of both projects, which project should it take? (5 marks) ii. Calculate the profitability index (PT) of both projects, which project should the firm accepts? (5 marks) b) Pelangi Berhad has a 4-year maximum acceptable payback period. The firm is considering the purchase of a new machine. Each machine requires an initial investment of RM100,000. The after tax cash inflows associated with each project are shown in the following table: Year 1 2 3 Cash Inflows (CF) Project Pluto (RM) Project Mars (RM) 10,000 40,000 20,000 30,000 30,000 20.000 40.000 10.000 20,000 20,000 5 i. Determine the payback period for each machine. (3 marks) ii. Because they are mutually exclusive, the company must choose one. Which should the company invest in? Explain why one of the projects is better choice than other. (3 marks) c) On average Jerneh Berhad has annual sales of RM12,000,000 (RM1,000,000 a month) with cost of goods sold of 75 percent of annual sales. The firm keep an average inventory balance of RM 1,780,000, receivable balance of RM1.260,000 and an average accounts payable balance of RM800.000. Assume there are 365 days in a year. What is Jerneh Berhad cash conversion cycle? (6 marks) Continued