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8. A consultant firm intends to buy or rent a carrier machine that will be used for 4 years. The firm estimates the pric
Posted: Fri Jul 01, 2022 7:56 am
by answerhappygod
- 8 A Consultant Firm Intends To Buy Or Rent A Carrier Machine That Will Be Used For 4 Years The Firm Estimates The Pric 1 (46.86 KiB) Viewed 22 times
8. A consultant firm intends to buy or rent a carrier machine that will be used for 4 years. The firm estimates the price to be RM 12,000 and the salvage value is RM 2,000 at the end of year 4. The operation and maintenance cost is RM 950 per year. A second option is to rent the machine with the rent cost of RM 4,500 per year and has to be paid at the beginning of every month. Due to some of the maintenance cost is included in the rent cost, the annual operation and maintenance cost is RM 100 cheaper as to compare with the first option. If the interest rate is 10% per year, use Annual Worth (AW) method to evaluate the best alternative.
8. AW Buy = - RM 4,304.70 AW Rent - RM 5,800 It is suggested that the
company should buy the machine because of the cost is less