Question: Exercise 1 JCon Ptd. Ltd. wants to acquire Production System Q. If System Q is used, it is estimated that the cash flow is as

Exercise 1 JCon Ptd. Ltd. wants to acquire Production System Q.

Exercise 1 JCon Ptd. Ltd. wants to acquire Production System Q. If System Q is used, it is estimated that the cash flow is as shown in the table below. Growth rate, i = 20% System Q Initial cost RM 320,000 Operation cost RM15,000 at year 1 to year 3. Operation cost at year 4 until the end of its life is RM20,000 per year. Revenue RM160,000 at year 1. After year 1, income decreases at the rate of RM2,000 per year until the end of its life Salvage value at end of RM10,000 life. Life 8 years Analyze this problem & determine the equivalent Present worth. Suggest if JCon should acquire Production System Q. Justify your suggestion / Explain why. (Show cash flow diagram and all calculations)

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