Question

Q2 (a) Maintenance cost for CNC Milling machine was RM 10,000 in year 1 through 3 and RM 20,000 in year 4 through 9. Determine the present worth at an interest rate of 4.5 % per year. (20 marks) Q2 (b) Table 1 shows deposit into saving account with rate of return 8% per year. Determine the future value at year 9. (25 marks) Table 1: Deposit Money into Saving Account Information Year Deposit, RM per year 0 800 1 2,000 2 2,000 3 2,000 4 1,800 5 1,600 6 1,400

Answer 1

Q2) a) Calculating the Present worth of Maintenence Cost:-

Year	Maintenence Cost ($)	PV Factor @4.50%	Present Value of Maintenence Cost ($)
1	10,000.00	0.9569	9,569.38
2	10,000.00	0.9157	9,157.30
3	10,000.00	0.8763	8,762.97
4	20,000.00	0.8386	16,771.23
5	20,000.00	0.8025	16,049.02
6	20,000.00	0.7679	15,357.91
7	20,000.00	0.7348	14,696.57
8	20,000.00	0.7032	14,063.70
9	20,000.00	0.6729	13,458.09
			117,886.17

So, the Present worth is $117,886.17

Q2) b)

Calculating the Future Value of saving Deposits at year 6:-

Year	Deposits ($)	Future Value Factor @8.00%	Future Value of Deposits ($)
0	800.00	1.5869	1,269.50
1	2,000.00	1.4693	2,938.66
2	2,000.00	1.3605	2,720.98
3	2,000.00	1.2597	2,519.42
4	1,800.00	1.1664	2,099.52
5	1,600.00	1.0800	1,728.00
6	1,400.00	1.0000	1,400.00
			14,676.08

So, Future Value at the end of year 6 is $14,676.08

Since, No deposits is been made from year 7 to year 9, thus only Interest will be accumulated.

Future Value at year end 9 = Future Value at year end 6(1+ interest rate)^3

= $14,676.08*(1+0.08)^3

= $18,487.63

So, Future Value at year end 9 is $ 18,487.63