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Question 3. (Total 20 marks) Luqman Musa has a precasting concrete products plant in Kampung Jawa, Kelantan State. He is considering three mutually exclusive alternatives, as part of a production improvement program. The three alternatives are: Initial Cost of plant USS 220,000 and equipment Annual Benefit USS 30,500 USS 40,600 USS 49,800 Useful Life Salvage ValueUS$ 50,000 USS 330,000 US$ 450,000 20 years uSS 0 20 years uSS 0 10 years The salvage value of each alternative is given. At the end of ten years, Alternative A could be replaced with another with a cost increased by 40% of the current cost at beginning of year 11, The benefits are the same from year 11 to year 20. The salvage value at end of 20 years is 0. Determine which alternative should be recommended for selection, if interest rate is 10%. Use Present worth Method for comparison. If there is a difference between Alternative A and C, explain the outcome. a. b.

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