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7. Carson Trucking is considering whether to expand its regional service center in Malaysia. The...

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Accounting

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7. Carson Trucking is considering whether to expand its regional service center in Malaysia. The expansion requires the expenditure of RM10,000,000 on new service equipment and would generate annual net cash flows from reduced costs of operations equal to RM2,500,000 per year for each of the next eight years. In year six and eight, the firm will get back a cash flow equal to salvage value of equipment which is valued at RM1,000,000. Thus, in year six and eight the investment cash flow totals RM3,500,000. If required rate of return is 12 percent, calculate: (a) Payback period (2 marks)

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