Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Initial Cost (RM) 112000 12000 31360 12.4% 530000 23000 132500 200000 9000 46000 4.8% IRR 7.9% FastBits Electronic Company Sdn. Bhd. is evaluating new precision

image text in transcribed
Initial Cost (RM) 112000 12000 31360 12.4% 530000 23000 132500 200000 9000 46000 4.8% IRR 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 Company D 360000 Annual Costs (RM) 900 Net Cash Flows (RM) 90000 7.946 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_2

Step: 3

blur-text-image_3

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

Fundamental Managerial Accounting Concepts

Authors: Thomas Edmonds

10th Edition

126410068X, 9781264100682

More Books

Students also viewed these Accounting questions

Question

3. Im trying to point out what we need to do to make this happen

Answered: 1 week ago

Question

1. I try to create an image of the message

Answered: 1 week ago