Question: QUESTION 5 [25 MARKS] MTDS Sdn. Bhd. is considering three mutually exclusive alternatives for purchasing a new welding machine in his company. The investment cost,
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QUESTION 5 [25 MARKS] MTDS Sdn. Bhd. is considering three mutually exclusive alternatives for purchasing a new welding machine in his company. The investment cost, lives, revenues and relevant costs are summarized in Table 1. Table 1: Cost comparison of three manufacturing machines a) Compare the three mutually exclusive alternatives, assuming that each machine meets the same specification requirements. Decide which machine should be selected in view of Future Worth (FW) method with the MARR value of 15% per year. (10 Marks) b) The manager request to use the incremental analysis based on Internal Rate of Return (IRR) method to validate the decision in part (a). Based on your incremental analysis, would you suggest to this company the same decision as in part (a)? In this analysis, you must provide the IRR value for each comparison. (15 Marks)
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