1. The City Centre Theaters board of directors is considering the replacement of heaters lighting system. The old system requires two people to operate it but the new system would require only one operator. The new lighting system will cost RM 128,750 and save the theater RM 25,000 annually for the next eight years.

a). Prepare table showing the proposed lighting system NPV for each of the following discount rates: 8%,10%,12%,14% and 16%.Comment on the pattern in the Net Present Value ( 10 Marks)

b). The theaters board of directors is uncertain about the cost savings with the new lighting system. How low could the new lightening systems annual saving be and still justly acceptance of the proposal by the proposal by the board of directors? Assume the theatres hurdle rate is 12%. (10 Marks)