Question Ref. No: 3233 FastBits Electronic Company Sdn. Bhd. is evaluating new precision inspection devices to help verify package quality. The manager has obtained the following bids from four companies. All devices have a life of five years and a minimum attractive rate of return of 5%. The alternatives are mutually exclusive. Company A Company B Company C Company D Initial Cost (RM) 420000 106000 440000 200,000 Annual Costs (RM) 900 12,000 23,000 9,000 Net Cash Flows (RM) 105000 29680 110000 46,200 IRR 7.9% 12.4% 7.9% 5% Determine the annual benefits of the devices from all four companies. Company A: Format 709500 Company B: Format 96450 Company C Format 766000 Company D Format 92700 Device from which company has the highest annual benefit? Format A FastBits should reject the bid from which company based on the given individual IRR? Format A Using incremental internal rate of return analysis, from which company, if any, should the manager purchase the new precision inspection device? Use trial andd error method with 5% and 11% interest rates. Understood? (YN) Format A Step 1-Eliminate Company Format A Step 2 - Rank Company from no 1-2-3 Format x-x-x Step 4 - Incremental IRR first com ison Format : 9.4 Step 5- Remove Company from selection Format: A Repeat Step 4 Incremental IRR 2nd comparison Format 7.7 Step 5- Choose Company Format: A