(( course : project appraisal ))

4.A new project is evaluated at present that involves purchasing a new assembly machine for RO 25,000. It will cost RO 2,000 to install the machinery. By making the investment, the annual operating costs will be reduced by RO 7,000 and expect to save RO 500 a year in maintenance.The new machine will require RO 750 each year for technical support. The machinery will be subject to depreciation over 5 years under the straight-line method of depreciation with an expected salvage value of RO 5,000. The effective tax rate is 35%. Calculate Relevant Cash Flows for Capital Project.