Compare which alternative which prefer using multiple attribute individual analysis present worth PW, if company use an interest rate of 0.75%?
Compare which alternative which prefer using multiple attribute individual analysis present worth PW, if company use an interest rate of 0.75%?
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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WCT Holdings Bhd, is considering two mutually exclusive alternatives A & B for implementing an automated passenger check-in counter at its hub airport. Each alternative meets the same service requirements, but differences in capital investment amounts, benefit, useful life, and cost expenditures. Compare which alternative which prefer using multiple attribute individual analysis present worth PW, if company use an interest rate of 0.75%? Include the cash flow diagram in your calculation:
Alternative A has useful life of 6 years, a capital investment is RM45,000.00 with estimated an annual benefit of RM3,500.00 per year and estimated for an annual operating & maintenance cost of RM750.00 per year. The alternative received one-off benefit saving of RM 1,500.00 in third year. The salvage value of RM10,700.00 at the end of year life.
Alternative B has useful life of 12 years, a capital investment is RM50, 000.00 with estimated an annual benefit of RM5,200.00 per year and estimated for an annual operating & maintenance cost of RM800.00 per year. The alternative received one-off benefit saving of RM 6,000 in seventh year. The salvage value of RM25, 000.00 at the end of year life.
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