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Q2 An IT expert has evaluating proposals for modification of data storage system. Two proposals have been finalized and accepted for consideration with both
Q2 An IT expert has evaluating proposals for modification of data storage system. Two proposals have been finalized and accepted for consideration with both proposals have a same capital investment of RM 20,000. Both proposals able to give net saving and return to the company for 10 years because of less non-defective unit and the increase of productivity as shown in Table 2. Analyze which proposal have the best return of investment for 10 years. You are required to use Future Worth Method. (20 marks) Month Table 2: Net saving and return to the company Proposal 1 Interest rate: 10% per year compounded quarterly compounded semi-annually Proposal 2 Interest rate: 8% per year Revenues (RM) Expenses (RM) Revenues (RM) Expenses (RM) 1 4,500 4,000 2 4,500 4,000 3 4,500 4,000 4 4,000 5 2,000 6 1,000 7 1,000 750 8 1,000 9 10
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