An IT expert has evaluating proposals for modification of data storage system. Two proposals have been finalized and accepted for consideration with both proposals have a same capital investment of RM 20,000. Both proposals able to give net saving and return to the company for 10 years because of less non-defective unit and the increase of productivity as shown in Table 2. Analyze which proposal have the best return of investment for 10 years. You are required to use Future Worth Method. Table 2: Net saving and return to the company Proposal 1 Interest rate: 10% per year compounded quarterly Proposal 2 Interest rate: 8% per year compounded semi-annually Month Revenues (RM) Expenses (RM) Revenues (RM) Expenses (RM) 1 4,500 4,000 2 4,500 4,000 3 4,500 4,000 4 4,000 5 2,000 1,000 7 1,000 750 8 1,000 10 6,
An IT expert has evaluating proposals for modification of data storage system. Two proposals have been finalized and accepted for consideration with both proposals have a same capital investment of RM 20,000. Both proposals able to give net saving and return to the company for 10 years because of less non-defective unit and the increase of productivity as shown in Table 2. Analyze which proposal have the best return of investment for 10 years. You are required to use Future Worth Method. Table 2: Net saving and return to the company Proposal 1 Interest rate: 10% per year compounded quarterly Proposal 2 Interest rate: 8% per year compounded semi-annually Month Revenues (RM) Expenses (RM) Revenues (RM) Expenses (RM) 1 4,500 4,000 2 4,500 4,000 3 4,500 4,000 4 4,000 5 2,000 1,000 7 1,000 750 8 1,000 10 6,
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
Problem 1PS
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Transcribed Image Text:Q2 An IT expert has evaluating proposals for modification of data storage system. Two proposals
have been finalized and accepted for consideration with both proposals have a same capital
investment of RM 20,000. Both proposals able to give net saving and return to the company
for 10 years because of less non-defective unit and the increase of productivity as shown in
Table 2.
Analyze which proposal have the best return of investment for 10 years. You are required to
use Future Worth Method.
Table 2: Net saving and return to the company
Proposal 1
Interest rate: 10% per year
compounded quarterly
Revenues (RM) | Expenses (RM)
Proposal 2
Interest rate: 8% per year
compounded semi-annually
Month
Revenues (RM) | Expenses (RM)
1
4,500
4,000
2
4,500
4,000
3
4,500
4,000
4
4,000
5
2,000
1,000
7
1,000
750
8
1,000
9.
10
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