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  • Exercise 3 - Updated 020615

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    ikhwanstorage
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    The document contains financial information for a private firm considering a project with a cost of RM5,000,000 initially. Over 5 years: - Revenue would be RM5,500,000 annually, increasing to RM6,500,000 in year 5. - Operating costs are RM1,690,000 annually. - Discounting the projected cash flows at 10% yields a net present value of RM10,063,818.91, indicating the benefits exceed the costs and the project should be accepted.

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    Exercise 3- Updated 020615

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    The document contains financial information for a private firm considering a project with a cost of RM5,000,000 initially. Over 5 years: - Revenue would be RM5,500,000 annually, increasing to RM6,500,000 in year 5. - Operating costs are RM1,690,000 annually. - Discounting the projected cash flows at 10% yields a net present value of RM10,063,818.91, indicating the benefits exceed the costs and the project should be accepted.

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    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    10 views2 pages

    Exercise 3 - Updated 020615

    Uploaded by

    ikhwanstorage
    The document contains financial information for a private firm considering a project with a cost of RM5,000,000 initially. Over 5 years: - Revenue would be RM5,500,000 annually, increasing to RM6,500,000 in year 5. - Operating costs are RM1,690,000 annually. - Discounting the projected cash flows at 10% yields a net present value of RM10,063,818.91, indicating the benefits exceed the costs and the project should be accepted.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    of 2

    GROUP HOMEWORK 3

    Question 1(b)

    discount rate, r 10%

    WAGES PER YEAR workers RM 960,000.00


    management RM 480,000.00
    Total/year RM 1,440,000.00
    RAW MATERIAL PER YEAR RM 200,000.00
    UTILITIES PER YEAR RM 50,000.00
    OUTPUT PER YEAR RM 5,500,000.00
    SELLING PRICE RM 1,000,000.00

    YEAR BENEFIT COST CASH FLOW DISC FACTOR


    0 RM - RM5,000,000.00 RM (5,000,000.00) 1.000
    1 RM 5,500,000.00 RM 1,690,000.00 RM 3,810,000.00 0.909
    2 RM 5,500,000.00 RM 1,690,000.00 RM 3,810,000.00 0.826
    3 RM 5,500,000.00 RM 1,690,000.00 RM 3,810,000.00 0.751
    4 RM 5,500,000.00 RM 1,690,000.00 RM 3,810,000.00 0.683
    5 RM 6,500,000.00 RM 1,690,000.00 RM 4,810,000.00 0.621
    PRESENT VALUE OF BENEFIT PRESENT VALUE OF COST PRESENT VALUE OF CASH FLOW
    RM - RM 5,000,000.00 RM (5,000,000.00)
    RM 5,000,000.00 RM 1,536,363.64 RM 3,463,636.36
    RM 4,545,454.55 RM 1,396,694.21 RM 3,148,760.33
    RM 4,132,231.40 RM 1,269,722.01 RM 2,862,509.39
    RM 3,756,574.00 RM 1,154,292.74 RM 2,602,281.26
    RM 4,035,988.60 RM 1,049,357.04 RM 2,986,631.56
    RM 21,470,248.55 RM 11,406,429.64 RM 10,063,818.91

    *positive value shows that


    benefit is more than cost, so the
    private firm should continue the
    project

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