Question: Question 1 MultiAlpha is considering replacing an old machine with a new one.Two months ago their chief engineer completed a training workshop on the new

Question 1

MultiAlpha is considering replacing an old machine with a new one.Two months ago their chief engineer completed a training workshop on the new machine's operation and efficiency.The cost of RM4000 cost for this workshop session has already been paid.If the new machine is purchased, it would require RM5000 in installation and modification costs to make it suitable for operation in the factory.

The old machine originally cost RM90000 five years ago and is being depreciated by RM15000 per year.The new machine will cost RM80000 before installation and modification.It will be depreciated by RM5000 per year.The old machine can be sold today for RM10000.The marginal tax rate for the firm is 28%.

Compute the relevant initial outlay in this capital budgeting decision.

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