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please give the complete answer... 1. Plaggio Ltd. needs to replace its production machinery to meet its increase in production. The following information relates to
please give the complete answer...
1. Plaggio Ltd. needs to replace its production machinery to meet its increase in production. The following information relates to three offers for the capital expenditure on the machinery. You are required by the managing director to recommend one of the three tenders. A B .c RM310,000 RM280,000 RM380,000 5 years 5 years 4 years Tenders Cost Expected Life Scrap Value expected Expected cash inflow End of year: 1 RM10,000 RM30,000 RM20,000 RM RM RM 90,000 110,000 85,000 100,000 100,000 80,000 155,000 165,000 95,000 100,000 3 4 80.000 80,000 5 75,000 60,000 The company requires a minimum return on its cost of capital of 12%. (6 marks) Required: (a) Calculate the payback period for each tender. (b) Calculate the Accounting rate of return using the straight line method for depreciation (c) Calculate the Net Present Value (NPV) of each tender. (d) Calculate the internal rate of retum for each tender. (e) State which tender should be accepted under each appraisal method, stating some of the advantages and disadvantages of each method. (9marks) (9 marks) (9 marks) (7marks)
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