Question: A machine costing RM900,000, which can be used for five years with no salvage value left, can generate yearly income before interest and tax of

A machine costing RM900,000, which can be used for five years with no salvage value left, can generate yearly income before interest and tax of RM280,000.

Required:

a) Compute the annual rate of return for five years by using the beginning of year book value as the base (Corporate income tax rate is 50%).

i) Straight line method

ii) Sum of the years' digits method.

b) Comment your answers

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