(b) Beenedict Corporation has been approached to supply 100,000 units of embroidery scarf monthly to Readtea...

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(b) Beenedict Corporation has been approached to supply 100,000 units of embroidery scarf monthly to Readtea Berhad for 5 years. Due to that, Beenedict Corporation needs to invest in a new embroidery machine which cost about RM400,000. To continue with the plan, Beenedict Corporation has to acquire a debt from RBC Bank at the cost before tax of 10 percent per annum. The other options that the company has is to lease the facilities at RM2,500 per month. The company's depreciation policy matches the currently available tax write off for capital allowances. The allowance announced by Inland Revenue Board for machinery is at 20 percent on cost per annum. The corporate tax for the year is 24 percent. Using Net Present Value (NPV) to determine whether Beenedict Corporation should lease or purchase the machine. (16 marks) (b) Beenedict Corporation has been approached to supply 100,000 units of embroidery scarf monthly to Readtea Berhad for 5 years. Due to that, Beenedict Corporation needs to invest in a new embroidery machine which cost about RM400,000. To continue with the plan, Beenedict Corporation has to acquire a debt from RBC Bank at the cost before tax of 10 percent per annum. The other options that the company has is to lease the facilities at RM2,500 per month. The company's depreciation policy matches the currently available tax write off for capital allowances. The allowance announced by Inland Revenue Board for machinery is at 20 percent on cost per annum. The corporate tax for the year is 24 percent. Using Net Present Value (NPV) to determine whether Beenedict Corporation should lease or purchase the machine. (16 marks)