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1.3 A company is preparing a quotation for a one-month consultancy project and seeks your...

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Accounting

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1.3 A company is preparing a quotation for a one-month consultancy project and seeks your help in determining the relevant cost of one of the members of its project team. Currently the company employs the consultant on an annual salary of RM 36,000. In addition, the company provides the consultant with a company car which incurs running costs of RM 6,000 each year. The car will continue to be provided to the consultant whether this project is undertaken by the company or not. This consultant is fully employed on current projects and, if she were to be transferred to this new project, then an existing junior consultant would be used to cover her current work. The junior consultant would be paid a bonus of RM 5,000 for undertaking this additional responsibility Another alternative that the company is considering is hiring an external consultant who has the necessary technical knowledge to work on the new consultancy project on a one month contract at a cost of RM 4,500. The relevant cost to be used in preparing the quotation is A RM 3,000 B RM 3,500 C RM 4,500 DRM 5,000 1.4 A company has a nominal (money) cost of capital of 18% per annum. If inflation is 6% each year, calculate the company's real cost of capital to the nearest 0.01%

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