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TORIAL 2 1) A granite company is planning to buy a fully automated granite cutting machine. If it is purchased under down payment, the cost
TORIAL 2 1) A granite company is planning to buy a fully automated granite cutting machine. If it is purchased under down payment, the cost of the machine is RM16,00,000. If it is purchased under instalment basis, the company has to pay 25% of the cost at the time of purchase and the remaining amount in 10 annual equal instalments of RM2,00,000 each. Suggest the best alternative for the company using the present worth basis at i-18%, compounded annually. 2) A finance company advertises two investment plans. In plan 1, the company pays RM12,000 after 15 years for every RM1,000 invested now. In plan 2, for every RM1,000 invested, the company pays RM 4,000 at the end of the 10th year and RM4,000 at the end of 15th year. Select the best investment plan from the investor's point of view at i = 12%, compounded annually. 3) Tanjung Investment Sdn.Bhd. accepts RM10,000 at the end of every year for 20 years and pays the investor RM8,00,000 at the end of the 20 year. Mawar Investment Sdn.Bhd accepts RM10,000 at the end of every year for 20 years and pays the investor RM15,00,000 at the end of the 25th year. Which is the best investment alternative? Use Present Worth base with i -12% 4) A mechanical engineer is considering building automated materials-handling equipment for a production line. On the one hand, the equipment would substantially reduce the manual labour currently required to move items from one part of the production process to the next. On the other hand, the equipment would consume energy, require insurance, and need periodic maintenance. Alternative 1: Continue to use the current method. Yearly labour costs are RM19200 Alternative 2: Build automated materials-handling equipment with an expected service life of 10 years First cost: RM15 000 Labour : RM3300 per year Power: RM400 per year Maintenance : RM2400 per year Taxes and insurance : RM300 per year If the MARR is 9 percent, which alternative is better a present worth comparison
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