An engineer is on a committee to evaluate proposals for maintenance packages for seven years to be directly linked to the four circuit board cutting machines. Two packages have been finalized and accepted for consideration with both proposals fulfilling all the requirement listed by the company. Both proposals are:

Package 1: RM4,000 every year and increase RM500 per year. Two main components have to be replace at year 3 and year 5 with cost RM800.

Package 2: Free maintenance for early 3 years and pay the annual maintenance cost RM8,000 starting at year 4 till the end. Additional cost of RM900 for last three years.

Recommend to the company the best maintenance package with Minimum Attractive of Return set by the company at 8%.