Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

46000 7.9% FastBits Electronic Company Sdn. Bhd. is evaluating new precision inspection devices to help verify package quality. The manager has obtained the following bids

image text in transcribed
46000 7.9% FastBits Electronic Company Sdn. Bhd. is evaluating new precision inspection devices to help verify package quality. The manager has obtained the following bids from four companies. All devices have a life of five years and a minimum attractive rate of return of 6%. The alternatives are mutually exclusive. Description Company A Company B Company C Company D Initial Cost (RM) 360000 112000 530000 200000 Annual Costs (RM) 900 12000 23000 9000 Net Cash Flows (RM) 90000 31360 132500 IRR 12.4% 79% 4.8% Determine the annual benefits of the devices from all four companies. Company A: Format : 80600 Company B: Format : 89450 Company C: Format : 483200 Company D: Format : 79000 Device from which company has the highest annual benefit? Format: A FastBits should reject the bid from which company based on the given individual IRR? Format : A Using incremental internal rate of return analysis, from which company, if any, should the manager purchase the new precision inspection device? Use trial and error method with 6% and 12% interest rates. Understood? (Y/N) Format: A Step 1- Eliminate Company Format : A Step 2 - Rank Company from no 1-2-3 Format : X-X-X Step 4 - Incremental IRR first comparison Format: 9.8 Step 5 - Remove Company from selection Format : A Repeat Step 4 - Incremental IRR 2nd comparison Format : 8.4 Step 5 - Choose Company Format: A Demonstrate that the same company selection would be made with proper application of the Present Worth (PW) method. PW Company A Format : 33695 PW Company B Format : 40306 PW Company C Format: 78362 PW Company D Format :-2530 Thus, choose Company Format : A

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Data Analytics For Accounting

Authors: Vernon Richardson

3rd Edition

1264444907, 9781264444908

More Books

Students also viewed these Accounting questions