7.9% 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 6%. The alternatives are mutually exclusive. Description Company A Company B Company Company D Initial Cost (RM) 360000 112000 530000 200000 Annual Costs (RM) 900 12000 23000 9000 Net Cash Flows (RM) 90000 31360 132500 46000 IRR 12.4% 7.9% Determine the annual benefits of the devices from all four companies. Company A: Format : 80600 Company B: Format : 89450 Company C: Format : 483200 Company D: Format : 79000 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 and error method with 6% and 12% interest rates. Understood? (Y/N) 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 comparison Format: 9.8 Step 5 - Remove Company from selection Format: A Repeat Step 4 - Incremental IRR 2nd comparison Format : 8.4 Step 5 - Choose Company Format : A Demonstrate that the same company selection would be made with proper application of the Present Worth (PW) method. PW Company A Format : 33695 PW Company B Format : 40306 PW Company C Format: 78362 PW Company D Format: -2530 Thus, choose Company Format : A