Question
UPNM has decided to contract out their shuttle bus servicing for RM950,000 per year for 5 years. Your family business is interested to bid for
UPNM has decided to contract out their shuttle bus servicing for RM950,000 per year for 5 years. Your family business is interested to bid for the contract and asked you to prepare the tender proposal and submit it to the project funder. The project capital cost is RM1,200,000 and the operating maintenance costs are RM300,000 for year 1, RM250,000 for year 2, RM240,000 for year 3, RM270,000 in year 4 and year 5, respectively. At the end of the contract, some busses will be sold to UPNM at the minimal cost of RM450,000. Draw the cash flow diagram for this project. If the funder MARR is 13.0%, calculate the IRR and ROI. Evaluate whether should the family business company bid for the contract.
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