Question
10 Q1 TUAH Enterprise is considering purchasing a new system to improve one of its current production lines. Two types of systems are available
10 Q1 TUAH Enterprise is considering purchasing a new system to improve one of its current production lines. Two types of systems are available on the market. The lifespan of the system A and B, but the company plans only use the service of either system not more than eight years. The cost elements of both systems are listed in Table A below. The company always has another option: leasing a system at RM3,600 per year which is fully maintained by the leasing company. (a) Suggest TWO (2) decisions alternatives to the company. (b) Develop the cash flow diagram for the above alternative. (4 marks) (6 marks) Table A: System Information Item First Cost, RM System A 4,000 System B 8,000 Annual Operating Cost, 500 200 RM Change Filter 200 every year 300 every 2 years Useful Life, years 4 8 Salvage Value, RM 1000 2,500
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