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b) A company invests in one of the two mutually exclusive alternatives. The life of both alternatives is estimated to be 5 years with the
b) A company invests in one of the two mutually exclusive alternatives. The life of both alternatives is estimated to be 5 years with the following investments and annual returns as shown in Table 1. Calculate by using an Annual Equivalent (AE) method and determine which alternative shall be selected A or B. Investment Annual equal return life interest Table 1 Alternative A RM (150,000) RM 60,000 5 years 25% Alternative B RM (75,000) RM 70,000 5 years 25% (20 marks)
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