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Q5 Table 1 indicates cash flows for three different alternatives. The interest rate for the cash flows are assumed to be 10%. (a) Suggest the

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Q5 Table 1 indicates cash flows for three different alternatives. The interest rate for the cash flows are assumed to be 10%. (a) Suggest the best alternative in terms of capital recovery. (15 marks) (b) Suggest the economically best alternative. (10 marks) Table 1: Cash flow for different alternatives. A B 100,000 500,000 700,000 20,000 50,000 40,000 First Cost, RM Annual Operating cost, RM per year Major overhaul every 10 years, RM Salvage value, RM None None 100,000 8,000 30,000 220,000 Life, years 3 5 None

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