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Lee and Partners Sdn. Bhd. intent to invest in a new machine to increase the production volume. You are assigned to calculate the 3

 



Lee and Partners Sdn. Bhd. intent to invest in a new machine to increase the production volume. You are assigned to calculate the 3 given options. Assume that the business will last 5 years with a minimum attractive rate of return (MARR) of 10%. The options are summarized in Table 1. Table 1: Cash flows summary of the investments Initial Investment, RM Option 1 5,000 Option 2 Option 3 10,000 14,000 Net Annual Revenues, RM/year 1.500 2.020 5,033 Salvage value, RM 2,000 2,000 2.000 (a) Construct a cash flow diagram for each option. (b) Determine which option will be chosen by using present worth analysis.

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