Question
Wasif Sdn. Bhd. purchases a new machine which is expected to produce cash savings to the firm by eliminating the need of five employees and
Wasif Sdn. Bhd. purchases a new machine which is expected to produce cash savings to the firm by eliminating the need of five employees and salaries. This amount is to have an annual savings of RM150,000. The installation machine cost is RM300,000 and will last for 20 years. If the firm chooses to finance this asset with a 1-year note, then it will not be able to repay the loan from the RM50,000 cash flow generated by the asset. As such, Wasif Sdn. Bhd. needs to consider a 20-year loan.
(i) Choose ONE (1) approach that best described the given situation and explain the answer.
(ii) Sketch the graph to show the approach based on the answer in (i) above.
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