Answer Happy

Lee and Partners Sdn. Bhd. plans to purchase a new machine to start a manufacturing plant. Two suppliers offered the estimates below: Item Supplier A Supplier B Purchasing Price ($) 200,000 150,000 Annual Maintenance Cost ($/ year) 3,000 2,500 Salvage value ($) 1,000 2,000 6 9 Life (year) (a) Determine which supplier should be selected base on a present worth comparison if the MARR is 15% per year. (5 Marks) (b) If Lee and Partners Sdn. Bhd. has a standard practice of evaluating all options over a 5 year study period, which vendor should be selected? Assume the salvage values are not expected to change. (5 Marks)