(a) Mak Cik Kiah is considering two alternatives for expanding her business; buying a small restaurant and renting a small restaurant. The small restaurant has an initial cost of RM80,000. Daily operating cost is expected to be RM100. The alternative of renting a small restaurant has a rental cost of RM150 per day. At 15% per year worth of money, how many days per year must the restaurant be in use if buying alternative is to be chosen. Take analysis period of 10 years. (b) A machine costs RM 20,000 and generates an annual end-of-year benefit of RM 6,000 for
(a) Mak Cik Kiah is considering two alternatives for expanding her business; buying a small restaurant and renting a small restaurant. The small restaurant has an initial cost of RM80,000. Daily operating cost is expected to be RM100. The alternative of renting a small restaurant has a rental cost of RM150 per day. At 15% per year worth of money, how many days per year must the restaurant be in use if buying alternative is to be chosen. Take analysis period of 10 years. (b) A machine costs RM 20,000 and generates an annual end-of-year benefit of RM 6,000 for
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:(a) Mak Cik Kiah is considering two alternatives for expanding her business; buying a small
restaurant and renting a small restaurant. The small restaurant has an initial cost of RM80,000.
Daily operating cost is expected to be RM100. The alternative of renting a small restaurant has
a rental cost of RM150 per day. At 15% per year worth of money, how many days per year
must the restaurant be in use if buying alternative is to be chosen. Take analysis period of 10
years.
(b) A machine costs RM 20,000 and generates an annual end-of-year benefit of RM 6,000 for
8 years. If rate of return is 10% per year, determine the breakeven point in years, at which the
purchase
price equals
the
present
value
of
the
benefits
received.
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