SHORT TERM DECISIONS MAKING

Albahra Company is a manufacturing company. The CEO, Muhammad Bahra have received monthly salaries of RM20,000. Currently, he plans to replacement one of the factory machine because it's always breakdown. The original cost of the machine is RM210,000. If the company change to a new machine, the cost of new machine is RM40,000. Both have a different useful life; 12 years for old machine and 7 years for new machine. Currently, the age of old machine is 5 years with a book value of RM70,000. The annual cash operating costs is RM10,000 by using old machine and RM9,000 if the company replace to a new machine. Additional information is as follows: