Topex Sdn Bhd's management is always looking for ways to improve productivity and efficiency. This is the more important in view of rising wage costs and difficulty in hiring workers. The company is looking to buy a new CNC grinding machine to replace the old nachine that had been bought for RM100,000 5 years ago. The old machine has a life of 4 years. If sold now this old machine can fetch RM 5,000. Topex's management is considering a new and more efficient machine. This new nachine will cost RM170,000 and can last for 4 years. The resale value then is RM20,000. Topex will also incur freight and installation charges of RM1,000 and RM9,000 respectively. The new machine is more productive and can generate RM62,000 more contributions year. Spoilage cost of the new machine would be RM2,000 a year, while the current poilage is RM5,000 a year. b) Topex's CEO now asks you to confirm the viability of yet another This machine will cost RM160,000 and have the following cash Year 1 2 3 4 ii) Assess the project's viability by computing its: Payback period i) Cash Flow (RM) 40,000 50,000 60,000 80,000 Accounting rate of return
Topex Sdn Bhd's management is always looking for ways to improve productivity and efficiency. This is the more important in view of rising wage costs and difficulty in hiring workers. The company is looking to buy a new CNC grinding machine to replace the old nachine that had been bought for RM100,000 5 years ago. The old machine has a life of 4 years. If sold now this old machine can fetch RM 5,000. Topex's management is considering a new and more efficient machine. This new nachine will cost RM170,000 and can last for 4 years. The resale value then is RM20,000. Topex will also incur freight and installation charges of RM1,000 and RM9,000 respectively. The new machine is more productive and can generate RM62,000 more contributions year. Spoilage cost of the new machine would be RM2,000 a year, while the current poilage is RM5,000 a year. b) Topex's CEO now asks you to confirm the viability of yet another This machine will cost RM160,000 and have the following cash Year 1 2 3 4 ii) Assess the project's viability by computing its: Payback period i) Cash Flow (RM) 40,000 50,000 60,000 80,000 Accounting rate of return
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 16PB: At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The...
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