Question: Mohammed and Mohammed constructions is proposing to mechanize their operations. Two proposals M and Nin form of quotations have been received from two different vendors.

Mohammed and Mohammed constructions is proposing to mechanize their operations. Two

proposals M and Nin form of quotations have been received from two

Mohammed and Mohammed constructions is proposing to mechanize their operations. Two proposals M and Nin form of quotations have been received from two different vendors. The proposal in each case costs OMR 500,000. A discount factor of 12% is used to compare the proposals. Cash inflows after taxes for proposals M and N Machine M Machine N 11 150,000 50,000 200,000 150,000 3 250,000 200,000 4 150,000 300,000 100,000 200,000 Year 11 12 13 14 15 Present value of 0.893 0.797 0.712 10.636 0.567 12%

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