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Table 1 shows the information gathered to perform an economic analysis to select the most appropriate mini water treatment plant proposed by several consultant for
Table 1 shows the information gathered to perform an economic analysis to select the most appropriate mini water treatment plant proposed by several consultant for AH Semiconductor Sdn. Bhd. Each of the proposed plant has a useful life of seven years. The company's minimum attractive rate of return (MARR) is 10% per year. i) Evaluate the profitability of plant A. Justify your answer through calculation ii) Using incremental investment analysis method (IRR-technique), which plant should be selected? iii) By referring to your answer in (ii), will it be the same decision if you are using equivalent worth method to determine the best option? Explain your answer (no calculation is required) Table 1 A B D E 37,000 35,000 20,000 24,000 29,000 9,000 2,000 11,500 7,500 10,000 Plant Initial Investment Cost (RM) Net Cash 1 Flow (RM, End 2 of Year) 3 - 7 Market Value (RM, End of Life) IRR 5,500 -500 -1,000 -1,000 6,500 5,000 11,500 4,500 4,500 6,500 2,500 500 0 2,500 1,500 12% 16% 7% 17%
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