Answer Happy

u 1 Sdn Bhd is planning to expand its range of automotive components by producing several sheet metal parts. Several combinations of new machine and workers could serve to fulfil this new agenda. There are two final proposal identified by the engineering department. Both proposals are: Machining Centre 1: New machining centre with two workers. The new machining centre will cost RM150,000 and installation cost is RM20,000. The maintenance cost to maintain the machining centre is RM8,000 per year start at year 3. Machining Centre 2: New machining centre with an automatic pallet changer and one worker. Machining centre 2 option will use the same machining centre as option 1 but adding the automatic pallet changer will cost them RM40,000 and additional installation cost RM 7,000. This proposal requires maintenance RM12,000 per year. Each of these proposal incurs different costs and revenues. The first year net revenue will be RM100,000 per year for both proposal, but the usage of automatic pallet changer in machining centre 2 is expected to increase the net revenue by 13% per year. The salary of worker is RM1,500 per month. Recommend the best proposal using Present Worth Analysis over the five-year study period with Minimum Attractive Rate of Return set by the Sdn Bhd at 8% per year.