Digital Technology Sdn Bhd manufactures microchips. The company is facing a sudden surge in demand for...

 

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Digital Technology Sdn Bhd manufactures microchips. The company is facing a sudden surge in demand for microchips in January 2022. The company is considering investing in an additional state-of the art testing facility to cater for the increase in the production of microchips to meet the increasing demand locally and overseas. The following information has been compiled on the new testing facility: RM 160,000 90,000 75,000 14,000 Investment cost for the new facility & equipment Cost of installation and commissioning Annual expected cash inflow (revenue) Annual expected cash outflow (expense) The testing facility is expected to have a useful life of 10 years with zero salvage value at the end of 10 years. The company's policy is to use straight-line deprecation method to depreciate its assets. Digital Technology Sdn Bhd cost of capital is 12%. Income tax rate is 24%. Required: Compute the following: a) The annual after-tax income from the investment. b) The annual after-tax cash flow from the investment. c) Payback period. d) Accounting rate of returns. e) Net present value (NPV) of the investment. f) Approximate Internal Rate of Return for the investment. (2 marks) (2 marks) (1 mark) (1 mark) (3 marks) (2 marke) Digital Technology Sdn Bhd manufactures microchips. The company is facing a sudden surge in demand for microchips in January 2022. The company is considering investing in an additional state-of the art testing facility to cater for the increase in the production of microchips to meet the increasing demand locally and overseas. The following information has been compiled on the new testing facility: RM 160,000 90,000 75,000 14,000 Investment cost for the new facility & equipment Cost of installation and commissioning Annual expected cash inflow (revenue) Annual expected cash outflow (expense) The testing facility is expected to have a useful life of 10 years with zero salvage value at the end of 10 years. The company's policy is to use straight-line deprecation method to depreciate its assets. Digital Technology Sdn Bhd cost of capital is 12%. Income tax rate is 24%. Required: Compute the following: a) The annual after-tax income from the investment. b) The annual after-tax cash flow from the investment. c) Payback period. d) Accounting rate of returns. e) Net present value (NPV) of the investment. f) Approximate Internal Rate of Return for the investment. (2 marks) (2 marks) (1 mark) (1 mark) (3 marks) (2 marke)

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a Annual AfterTax Income from the Investment Annual revenue RM75000 Annual expense RM14000 Taxable i... View the full answer