Western Pte Ltd (“Western”) manufactures ready-to-eat meals. Western is evaluating: Management Accounting Assignment, RP, Singapore

Question 3

Western Pte Ltd (“Western”) manufactures ready-to-eat meals. Western is evaluating whether to invest in a new packaging machine.

The table below shows the relevant cash flows from the investment.

* Note 1: This is equal to the last 6 (six) digits of your student ID. For example, if your student ID is 23100000, cash flow in Year 4 = $100,000

Western has a discount rate of 5% and wants to recover the cost of all investments within 3 years.

1. a) Calculate the Net Present Value and Payback Period for the above investment.

Based on the calculations for each tool, determine whether Western should invest in the new machine.

1. b) Marks will be awarded for Oral Questioning for this section. Please see marking criteria below.