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can someone teach me how to do the incremental IRR first comparison and second comparison and also the answer for the part i got wrong
can someone teach me how to do the incremental IRR first comparison and second comparison
and also the answer for the part i got wrong
4.8% 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 5%. The alternatives are mutually exclusive. Description Company A Company B Company C Company D Initial Cost (RM) 490000 109000 440000 200000 Annual Costs (RM) 900 12000 23000 9000 Net Cash Flows (RM) 122500 30520 110000 46000 IRR 7.9% 12.4% 7.9% Determine the annual benefits of the devices from all four companies. Company A: 123400 Format : 859700 Company B: 42520 Format : 49780 Company C: 133000 Format : 895000 Company D: 55000 Format : 42000 Device from which company has the highest annual benefit? D Format : A FastBits should reject the bid from which company based on the given individual IRR? D 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 5% and 11% interest rates. Understood? (Y/N) Y Format : A Step 1- Eliminate Company D Format : A Step 2 - Rank Company from no 1-2-3 A-C-B Format : X-X-X Step 4 - Incremental IRR first comparison X Format : 3.6 Step 5 - Remove Company from selection B X Format : A Repeat Step 4 - Incremental IRR 2nd comparison X Format : 8.4 Step 5 - Choose Company A Format : A Demonstrate that the same company selection would be made with proper application of the Present Worth (PW) method. PW Company A X Format : 40682 PW Company B X Format : 84764 PW Company C X Format : 67956 PW Company D X Format: -663 Thus, choose Company A X Format : AStep by Step Solution
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