Ouestion 1 GAP Textile Şdn Bhd. is a retail chain spegialising in casual clothing. Due to increasing demand, the management of GAP Textile Şdn, Bhd. is considering to purchase a new equipment to increase the production and revenues. Its choice is between Equipment X and Equipment Y. Both equipment have a useful life of 5 years. The initial cost (cash outlay) for Equipment X is RM180,000 and for Equipment Y is RM250,000 and their respective salvage values at the end of year 5 are given as follows: Equipment X (RM) (180,000) 12,000 Equipment Y (RM) (250,000) Year 5 20,000 The forecasted net operating cashflows generated of the two equipment are given as follows: Equipment X (RM) 40,000 Equipment Y (RM) 70,000 70,000 Year 1 2 50,000 3 90,000 70,000 4 70,000 70,000 70,000 5 70,000

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