111000 12000 31080 46000 4.8% IRR 7.9% FastBits Electronic Company Sdn. Bhd. is evaluating new precision inspection devices to help verify package quality. The manager has obtained the following bids from four companies. All devices have a life of five years and a minimum attractive rate of return of 6%. The alternatives are mutually exclusive. Description Company A Company B Company Company D Initial Cost (RM) 470000 200000 Annual Costs (RM) 900 23000 9000 Net Cash Flows (RM) 115000 117500 12,4% 7.9% Determine the annual benefits of the devices from all four companies. Company A: Format : 679500 Company B: Format : 43040 Company C: Format: 460300 Company D: Format: 87000 Device from which company has the highest annual benefit? Format : A FastBits should reject the bid from which company based on the given individual IRR? Format: A Using incremental internal rate of return analysis, from which company, if any, should the manager purchase the new precision inspection device? Use trial and error method with 6% and 12% interest rates. Understood? (Y/N) Format: A Step 1- Eliminate Company Format : A Step 2 - Rank Company from no 1-2-3 Format : X-X-X Step 4 - Incremental IRR first comparison Format: 9.2 Step 5 - Remove Company from selection Format : A Repeat Step 4 - Incremental IRR 2nd comparison Format : 2.5 Step 5 - Choose Company Format: A Demonstrate that the same company selection would be made with proper application of the Present Worth (PW) method. PW Company A Format : 67363 PW Company B Format : 37594 PW Company C Format : 37558 PW Company D Format: -2680 Thus, choose Company Format: A 111000 12000 31080 46000 4.8% IRR 7.9% FastBits Electronic Company Sdn. Bhd. is evaluating new precision inspection devices to help verify package quality. The manager has obtained the following bids from four companies. All devices have a life of five years and a minimum attractive rate of return of 6%. The alternatives are mutually exclusive. Description Company A Company B Company Company D Initial Cost (RM) 470000 200000 Annual Costs (RM) 900 23000 9000 Net Cash Flows (RM) 115000 117500 12,4% 7.9% Determine the annual benefits of the devices from all four companies. Company A: Format : 679500 Company B: Format : 43040 Company C: Format: 460300 Company D: Format: 87000 Device from which company has the highest annual benefit? Format : A FastBits should reject the bid from which company based on the given individual IRR? Format: A Using incremental internal rate of return analysis, from which company, if any, should the manager purchase the new precision inspection device? Use trial and error method with 6% and 12% interest rates. Understood? (Y/N) Format: A Step 1- Eliminate Company Format : A Step 2 - Rank Company from no 1-2-3 Format : X-X-X Step 4 - Incremental IRR first comparison Format: 9.2 Step 5 - Remove Company from selection Format : A Repeat Step 4 - Incremental IRR 2nd comparison Format : 2.5 Step 5 - Choose Company Format: A Demonstrate that the same company selection would be made with proper application of the Present Worth (PW) method. PW Company A Format : 67363 PW Company B Format : 37594 PW Company C Format : 37558 PW Company D Format: -2680 Thus, choose Company Format: A
