QUESTION 2 - 30 marks Using data given in Table 1. UPNM Manufacturing uses four lift with design efficiency 80% but the running efficiency between 70% to 75% due to inadequate motor and control. Engineers have proposed that the lift motor and control to be upgraded. The cost of implementing the project is RM 150000. All lifts have a remaining life of 12 years but after upgrade have no selvage value at the end of 12 years. The annual electricity and maintenance saving in the lift house expected equivalent RM 15000 per year as stated in Financial statement. This savings is expected to increase at annual rate 5% as the cost of electricity increase over time. If the university uses a 10% interest rate for any project justification, what would be the annual equivalent energy savings due to the improvement. Table 1. Financial income statement of UPNM Manufacturing UPNM Manufacturing Income Statement Gross sales 2450 Cost of goods sold Materials 230 Labour 850 Overhead 230 Electricity 15 Gross Profit Selling Epenses General and administrative epenses Earning before interest and taxes (EBIT) Interest Epenses Earning before income taxes Provision for income taxes (40) % Net Income Note: Value in RM and thousands. 1325 1125 40 60 1025 25 1000 246 754 QUESTION 2 - 30 marks Using data given in Table 1. UPNM Manufacturing uses four lift with design efficiency 80% but the running efficiency between 70% to 75% due to inadequate motor and control. Engineers have proposed that the lift motor and control to be upgraded. The cost of implementing the project is RM 150000. All lifts have a remaining life of 12 years but after upgrade have no selvage value at the end of 12 years. The annual electricity and maintenance saving in the lift house expected equivalent RM 15000 per year as stated in Financial statement. This savings is expected to increase at annual rate 5% as the cost of electricity increase over time. If the university uses a 10% interest rate for any project justification, what would be the annual equivalent energy savings due to the improvement. Table 1. Financial income statement of UPNM Manufacturing UPNM Manufacturing Income Statement Gross sales 2450 Cost of goods sold Materials 230 Labour 850 Overhead 230 Electricity 15 Gross Profit Selling Epenses General and administrative epenses Earning before interest and taxes (EBIT) Interest Epenses Earning before income taxes Provision for income taxes (40) % Net Income Note: Value in RM and thousands. 1325 1125 40 60 1025 25 1000 246 754