EEEB253/EPPB2024, Interim Semester, 2020/2021 QUESTION 2 [30 MARKSI TNC Steel Ltd wants to build a warehouse at Bangi area. The company has identified four different location options. Information concerning the initial outlays and the annual net cash flow estimates are detailed in table below. The company uses11% MARR to evaluate the options. Option P Options Option T -320,000 -200,000 Option Q -275,000 48,500 Initial outlay year 0 (RM) Cash flows year 1 (RM) -190,000 24,000 35,000 78,000 33,000 48.500 36,100 78,000 42,000 55.900 42,700 78,000 51,000 55,900 49,000 78,000 Cash flows year 2 (RM) Cash flows year 3 (RM) Cash flows year 4 (RM) Cash flows year 5 (RM) Cash flows year 6 (RM) Cash flows year 7 (RM) Net present worth (RM) 60,000 63,300 56,400 78,000 69,000 63,300 59,700 78,000 78,000 63,300 61,000 78,000 22.779 ? ? 47,552 (a) Using Present Worth Method, determine which options should be considered for further analysis and which should be eliminated? Show all your workings (10 Marks (b) Using the Incremental Investment Rate of Return analysis, determine which project you should select. Show your workings accordingly (Hint: You can use either 11% or 17% discount rate). [16 Marks] (C) Calculate the incremental IRR for the project you have selected in (b). [4 Marks Page 3 of 5