10. (Hot question) A laundry shop wants to combine the laundry shop turns into a center of multi-function shop. Multifunction shop is the of process of combine the laundry shop with printing and photocopying machine shop. The total investment cost is RM1 million with following anticipated cost savings as per table given: Most machine in the shops typically can be use for 20 years and assume a 20% residual value at the end of the project life. It is also very common for a learning curve to take place in operating a complex new multi-function shop. To allow for the learning curve of the project, assume that only 70% of the full potential savings of total annual savings occur during the first to third year and 65% occur during the fourth to fifth year. The firm's MARR is known to be 10% per year. You have been asked by the owner of the company to evaluate the economic merit of the acquisition of the multifunction shop. Calculate the total annual saving and learning curve of present net worth (NPW). Current Cost (% saved) Savings Setup 400 000 60% Rework 65 000 70% Operators 220 000 55% Fixturing 120 000 60% Purchasing 80 000 45% Floor space 45 000 70% Maintenance 45 000 60% Interior 25 000 50% Inspection 30 000 60% Documentation 10 000 67% Total Annual Savings