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Calculate the net present value of the project

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Question - UCSI Bakery Ltd considering purchasing an industrial size oven which are used as part of a production line that bakes bread. The following data on a proposed investment project have been provided [ignore income taxes in this problem]:

Cost of equipment RM 70,000

Annual depreciation RM 26,250

Working capital required RM 50,000

Salvage value of equipment RM 0

Annual cash inflows from the project RM 40,000

Required rate of return 20 %

Life of the project 8 years

Working capital is recoverable at the end of this project.

Required - Calculate the net present value (NPV) of the project.

Reference no: EM132516854

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