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The Tasek Cement plant is expected to generate a revenue base of RM50 million per year. The investor of the company may have reason to
The Tasek Cement plant is expected to generate a revenue base of RM50 million per year. The investor of the company may have reason to be quite pleased with this projection for the simple reason that over the 5-year planning horizon, the expected revenue would total RM250 million, which is RM50 million more than the initial investment of RM200M). Assuming the interest rate of 10% per year, address the following: Will the initial investment be recovered over the 5-year horizon with the time value of money considered? If so, by how much extra in present worth funds? If not, what is the equivalent annual revenue base required for the recovery plus the 10% return on money? (10 marks)
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