QUESTION Cantik Sangat Sdn Bhd. is a cosmetic company and considering introducing a new hand lotion. Information regarding the manufacturing is as follows: Cost of the new manufacturing machine is RM500,000. The modification cost (which is not included in the cost) totaled to RM20,000. The expected salvage value at the end of its five year estimated useful life is RM80,000. The company uses straight line depreciation method to depreciate all its non-current assets. Cash flows for the project are as follows including terminal value in Year 5. Year Cash Flow (RM) 1-3 160,720 4-5 182,320 5 80,000 The corporation tax is 28% and the company cost of capital is 10%. Required: d. Calculate Net Present Value (NPV). Calculate Internal Rate of Return (IRR). е. f. Should Cantik Sangat Sdn. Bhd. purchase the new machine? Explain.

QUESTION Cantik Sangat Sdn Bhd. is a cosmetic company and considering introducing a new hand lotion. Information regarding the manufacturing is as follows: Cost of the new manufacturing machine is RM500,000. The modification cost (which is not included in the cost) totaled to RM20,000. The expected salvage value at the end of its five year estimated useful life is RM80,000. The company uses straight line depreciation method to depreciate all its non-current assets. Cash flows for the project are as follows including terminal value in Year 5. Year Cash Flow (RM) 1-3 160,720 4-5 182,320 5 80,000 The corporation tax is 28% and the company cost of capital is 10%. Required: d. Calculate Net Present Value (NPV). Calculate Internal Rate of Return (IRR). е. f. Should Cantik Sangat Sdn. Bhd. purchase the new machine? Explain.

Name: QUESTIONCantik Sangat Sdn Bhd. is a cosmetic company and considering
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Description: QUESTIONCantik Sangat Sdn Bhd. is a cosmetic company and considering introducing a new handlotion. Information regarding the manufacturing is as follows:Cost of the new manufacturing machine is RM500,000. The modification cost (which is notincluded

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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