1. Wira Berhad has provided the following information concerning a proposed investment project:

RM000

Initial investment	480,000
Working capital required	17,000
Annual net cash inflows	168,000
Salvage value	72,000
Life of the project	7

The working capital would be released at the end of the project. The cost of capital of the company is 11%.

Required:

Compute the net present value. Should the company accept the project?

2. Silau Berhad is considering purchasing a machine that would cost RM436,800 and have a useful life of 5 years. The machine would reduce cash operating costs by RM132,364 per year. The machine would have no salvage value.

Required:

1. Compute the payback period for the machine.
2. Compute the simple rate of return for the machine.
3. Based on your answer in (i) and (ii) above, should the company purchase the machine?