Soalan 2 Question 2 Untuk terus berdaya saing syarikat pembe

Soalan 2 Question 2 Untuk terus berdaya saing, syarikat pembekal untuk sebuah syarikat semikonduktor terkemuka perlu melabur untuk platform \'big data: Anggaran ekonomi untuk setiap pakej ditunjukkan dalam Jadual Q2 di bawah. To remain competitive, a supplier for a huge semiconductor company has to invest for a big data platform. The economic estimates for each package are shown in Table Q2 below Jadual S2/Table Q2 Pakej Package Pelaburan permulaan Initial investment Penerimaan tahunan Annual receipts Perbelanjaan tahunan Annual expensesY Jangka hayat (tahun) System life lyears) RM 9,000 RM 18,000 RM 4,500 RM 1,500 RM 150 RM 5,000 RM 1,500 10 RM 3,000 RM 300 Berdasarkan Jadual S2 diatas, jawab soalan-soalan berikut Based on Table Q2 above, answer the following questions: a) Sediakan gambarajah aliran tunai bagi setiap alternatif dengan dengan jelas. Present the cashflow diagram for each alternative clearly. (3 markah/marks) b) Pilih pakej terbaik dengan menggunakan kaedah PW. MARR yang digunakarn adalah 15% setahun, dan pakej yang dipilih perlu berkhidmat selama 10 tahun. Anggapkan pengulangan. Jelaskan dengan nyata kenapa anda mencadangkan pilihan tersebut. Select the best package by using the PW method. The MARR is 15% per year, and the package chosen must provide service for 10 years. Assume repeatability. Clearly state the reason behind your recommendation (4 markah/marks) c) Sahkan cadangan yang anda perolehi dalam S2(b) dengan menggunakan kaedah IRR dalam menilai alternatif. Berikan alasan terhadap cadangan anda. Confirm your recommendation obtained in Q2(b) using the IRR method in evaluating alternatives. Justify your recommendation. (6 markah/marks) Apakah kelebihan utama menggunakan IRR dalam pemilihan projek? What is the key advantage of using IRR in assessing project selections? d) (2 markah/marks) 4/10

Solution

Greetings

2(b) The question belong to capital budgeting decision involving g the projects which are mutually exclusive and unequal lives with repeatability feature. So this sum needs to be solved using LCM of lives method. LCM of lives is 10 years.

Project A

Annual Net Profit = 1500-150 =1350 MARR = 15%

PV of Cash inflows =PV(0.15,5,1350,0,0) = 4525.41

NPV = PV of Cash Inflows - Initial Investment = 4525.41 - 4500 = 25.41. This is for 5 years and stands at t= 0. When the project will be repeated, same NPV of 25.41 will be received at the end of 5th year. So PV of second NPV = 25.41/(1.15)^5 = 12.63. Therefore total NPV over 10 year period = 25.41 + 12.63 = 38.04

Project B

Net Annual Income =2700. The figures are exactly double. So every intermediate anand final answer will be double. Therefore final answer is 76.08

Project C

Annual Net Income = 3500

PV of Cash Inflows = PV(0.15,10,3500,0,0) = 17565.69

NPV = 17565.69 - 18000 = -434.31

So project B should be undertaken as it provides the highest NPV

2(c) IRR can be computed by hit and error method on excel whicb will equate the PV of cash flows with cash outflows.

Project A IRR = 15.23%

Project B IRR = 15.23%

Project C IRR = 14.365%

So here also project B is winner. Although project A also have same IRR as of Project B but NPV of proje t B is more, so it should be chosen over A.

2(d) Advantage of IRR over NPV is that it is unbiased, but NPV has size bias ie NPV favours the projects having large investment size but it may same or even lesser IRR than other projects. Sane thing was shown in above calculations. But our objective as wealth managers is maximisation of shareholders wealth, hence NOV is the undisputed winner.