Zehin decides to install a new fuel storage system A that cost RM 10,500 for his farm. He uses an estimated 18,000 liter

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Zehin Decides To Install A New Fuel Storage System A That Cost Rm 10 500 For His Farm He Uses An Estimated 18 000 Liter 1 (165.53 KiB) Viewed 51 times

Zehin decides to install a new fuel storage system A that cost RM 10,500 for his farm. He uses an estimated 18,000 liter/year and the new system will save him an estimated RM 0.15/liter on the fuel cost. The annual maintenance starts at second year is RM 750 and increases by RM 75 each year thereafter. After a period of 10 years, the estimated salvage is RM 2,000. The MARR is 7%. (a) Construct the cash flow diagram on the expenditure of the installation. (2 Marks) (b) Perform an annual worth evaluation and predict if this project is financially viable at the given MARR? (5 Marks) (c) Zehin is considering another option i.e. system B which has an initial cost of RM 15,000 with estimated salvage is RM 2,000 and zero annual cost. Use an annual worth analysis to determine if the system B should be selected over system A at the same MARR. (3 Marks)