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CONFIDENTIA BFF/BFM/151611/BFF1922 QUESTION 3 (25 MARKS) The projected market value and operation & maintenance (O&M) costs associated with a presently owned machine are shown in
CONFIDENTIA BFF/BFM/151611/BFF1922 QUESTION 3 (25 MARKS) The projected market value and operation & maintenance (O&M) costs associated with a presently owned machine are shown in Table 3. An outside vendor of services has offered to provide the service of the existing machine at a fixed price per year. If the presently owned machine is replaced now, the cost of the fixed-price contract will be RM330,000 for each of the next 3 years. If the presently owned machine is replaced next year or the year after that, the contract price will be RM350,000 per year. Determine if and when the defender should be replaced with the outside vendor using an interest rate of 10% per year. Assume used equipment similar to the defender will always be available. Table 3. The projected market value and operation& maintenance (O&M) costs associated with a presently owned machine Market Value, RM 300,000 250,000 140,000 100,000 80,000 Year O&M Cost, RM per Year -240,000 -250,000 -260,000 QUESTION 4 (25 MARKS) Gambang Sdn Bhd, an overland freight company, has purchased new trailers for
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