An investment of RM820,000 in a new machine to expand production capacity is being considered...
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Finance
An investment of RM820,000 in a new machine to expand production capacity is being considered by the company. Following are the budgeted cash flows given for the next 6 years:
Years RM000
1 (80) 2 110 3 160 4 250 5 220 6 180
Discount factors at the cost of capital of 10% per annum are:
Years
1 0.909 2 0.826 3 0.751 4 0.683 5 0.621 6 0.564
Required:
i. Calculate discounted payback period.
ii. Calculate Net Present Value using a 10% discount rate for the company.
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