(This question is the continuation def Comprehensive Example 2: Rozie Silk House, on page 201)

From the eartier part of the quesworn mowhy how derived the following cash flows:

Initial outlay RM251,400

Annual aftertax cash flows (Years 1-2) RM 58,280

(Years 3-5) RM 79,880

Terminal cash flows RM35, 000

The new machine has an expected usefull of five years. The company requires a minimum rate of return of 16%. The firm is maximum payback period is four years.

Based on the above information, you are required to calculate:

a. The payback period of the project.

b. The net present value of the project.

c. The internal rate of return of the project.

d. Should the company buy the new machine? Explain your answer.