J&T Logistic Company is planning to modernize one of its distribution centres located outside Pasir Gudang, Johor. Two o

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J T Logistic Company Is Planning To Modernize One Of Its Distribution Centres Located Outside Pasir Gudang Johor Two O 1 (43.96 KiB) Viewed 9 times

J&T Logistic Company is planning to modernize one of its distribution centres located outside Pasir Gudang, Johor. Two options to move goods in the distribution centre have been under consideration: forklift trucks and a conveyor system. The company expects that the distribution centre will be operational for the next 10 years. The conveyor system would last ten years whereas the forklift trucks would last only five years. The two options will design differently but will have identical capacities and will do exactly the same job. The expected cash flows for the two options, including maintenance costs and salvage value, are as follows: n 0 1 2 3 4 5 6 ASSIGNMENT 3 - RATE OF RETURN 7 8 9 10 Lift Trucks (RM) -40,000 -15,000 -15,000 -15,000 -15,000 -15,000 + 4,000 Conveyor System (RM) -68,000 -13,000 -13,000 -13,000 -13,000 -13,000 -13,000 -13,000 -13,000 -13,000 -13,000 + 5,000 (a) Draw and label a complete cash flow diagram of BOTH systems. (b) Which option should the company select at MARR = 12% by PW analysis? (c) Which option should the company select at MARR = 12% by using incremental analysis? (d) Draw and label a complete incremental cash flow diagram. (4 marks) (6 marks) rate of return (8 marks) (2 marks)