An industrial robot purchased 3 years ago for RM280,000 to reduce costs in a production line

is now too slow to satisfy increased demand. The robot can be upgraded now for RM140,000
or sold to another company for RM80,000. The annual maintenance and operating costs for
this robot will be RM170,000 per year and will have a salvage value of RM60,000 after 3
years. If upgraded, the presently owned robot will be retained for only 3 more years, then
replaced with a new robot.
The replacement robot, which will serve the company now and for at least 8 years will cost
RM440,000. Its salvage value will be RM100,000 for years 1 to 5, RM40,000 in year 6 and
RM20,000 in years 7 and 8. It will have an estimated operating costs of RM130,000 per
year.
a)

Draw the cash flow diagrams for the old and new robot.
b)
Perform the replacement analysis using the annual worth method for a 3 year
study period at 15% per year.
Should the company replace the presently owned robot now? Why?

c)

ANSWERS
a)
Defender
0
140,000

60,000
3

170,000

170,000

170,000

80,000
Challenger
100,000
0

1
130,000

130,000

130,000

440,000
b)

AWD = -(80,000+ 140,000)(A/P,15%,3) - 170,000 + 60,000

(A/F,15%,3)
= -220,000(0.43798) - 170,000 + 60,000(0.28798)
= $-249,076.8
AWC = -440,000(A/P,15%,3) - 130,000 + 100,000(A/F,15%,3)
= -440,000(0.43798) - 130,000 + 100,000(0.28798)
= $-293,934

c)

Keep the defender; lower AW

EXERCISE 2: ANSWERS
a) What is depreciation?
[1 mark]
b) Idea Perfect Sdn Bhd purchased a RM196,000 hole-punching machine with a freight charge of
RM1,000 and an installation cost of RM3,000. The machine has a recovery period of 5 years and the
salvage value is expected to be zero. Complete the depreciation below.
[24 marks]
Year

Straight Line
depreciation
without
switching
[2 marks]

Book value
using SL
method
[2 marks]

Double
declining
balance (DDB)
depreciation [5
marks]

Book value
using DDB
method
[5 marks]

Straight Line
depreciation if
switching [4
marks]

Depreciation
value if
switching
[6 marks]

0
1

RM40,000

RM200,000
RM160,000

RM80,000

RM200,000
RM120,000

RM40,000

RM80,000

RM40,000

RM120,000

RM48,000

RM72,000

RM30,000

RM48,000

RM40,000

RM80,000

RM28,800

RM43,200

RM24,000

RM28,800

RM40,000

RM40,000

RM17,280

RM25,920

RM21,600

RM17,280

RM40,000

RM10,368

RM15,552

RM21,600

Depreciation is defined as a gradual decrease in the utility of fixed assets with use and time.
Per = 0.5 marks
Year to switch: Year 4

COEB 442: EXERCISE 5/ASSIGNMENT 3

NAME:________________________________________ SID NO.:_________________
SEC.:____
Saturn Computer Corporation can produce 30,000 personal computers a year on its daytime
shift. The fixed manufacturing costs per year are RM3 million and the labor cost is RM9
million.
i)

Compute the unit manufacturing cost for the daytime shift.

[2 marks]

ii)

Suppose Saturn Corporation adds 30% to its daytime unit manufacturing cost for

corporate profit.
a)

What unit profit would Saturn realize on each computer?

[2 marks]

b)

What is the unit sales price?

[2

What is the profit if 10,000 units are sold?

[2

marks]
c)
marks]
iii) To increase its production to 60,000 units per year, Saturn is considering adding a second
shift. The unit labor cost for the second shift would be 25% higher than the day shift, but the
total fixed manufacturing costs would increase only to RM3.6 million from RM3 million.
Would adding a second shift increase or decrease the overall unit manufacturing cost at the
plant? Show your calculations.

[2 marks]

ANSWERS
i.Unit manufacturing cost:

(RM3,000,000+9,000,000)/30,000 =

RM400/unit
ii.a

RM400 (0.3) = RM120

b.

RM400 (1.3) = RM520.

c.

(10,000)(120) = RM 1,200,000

iii.(RM3,600,000+(2.25)(9,000,000)/60,000 = RM397.5/unit
Second shift decreases unit cost.

QUIZ 1

NAME: _____________________________ SID. NO.:_______________________

SECTION__________

True/False Questions
1.

Gross margin is the difference between Sales and COGS.

2. Accounts Receivables and marketable securities are long term

assets.
3. Depreciation is considered as expenses in the income
statement.
4.

Retained earnings is the sum of net income and dividends.

5.

Notes payable is a current liability.

6. Total manufacturing cost only include variable manufacturing

cost .
7.

Breakeven is the point where TR = TC.

8. The interest payment for a loan will be the same for all the
payment periods.
9.

Discounted payback period consider the time value of money.

10. The revenue received by a firm should be enough to cover the

capital costs only.

ANSWERS

1T

6F

2F
3T

7
T
8F

4F

9T

5T

10F

QUIZ 2

NAME: _____________________________ SID. NO.:_______________________

SECTION__________
Write the function notation .
1.

To find present value.

YEAR
0
1
2
3
4

CASH FLOW(RM)
?
-2,000
-2,000
-2,000
-2,000

2000 (P/A,i,N)
2.
YEAR
0
1
2
3
4

To find the future value.

CASH FLOW(RM)
5,000
-2,000
-2,000
-2,000
?

5,000(F/P, i,4) - 2,000(F/A,i,3)(F/P,i,1)

3.
YEAR
0
1
2
3
4

To find the value of A.

CASH FLOW (RM)
10,000

A
A

10,000(F/P,i, 2)(A/P,i, 2)

COEB 442: EXERCISE QUESTIONS (1)

QUESTION 1 [10 marks]

Sweet Corporation reported the following information for the year 2013.
Payments of Dividends

RM60,000

Purchase of Land

RM300,000

Payments of Bonds Payable

RM300,000

Issuance of Common Stock

RM200,000

Sale of Equipment

RM20,000

(a)
What amount will the corporation report as the net cash provided by financing
activities on the cash flow statement?
[4 marks]
(b)
If the net cash used for the investing activities is (RM400,000), calculate the
value of the acquisition of long term investments.
[4 marks]
(c)
What is the total net cash flow for Sweet Corporation for the year 2013 if the
net cash provided by operating activities is RM300,000?
[2
marks]

QUESTION 2 [25 marks]

(a)

In 2015, Becy, Sdn. Bhd. (a hardware retail company) sold 10,000 units of its

product at an average selling price of RM400 per unit. The average cost of goods sold are
RM250 each. Operating expenses for Becy, Inc. in 2015 were RM400,000 for administration
and other operating costs, and RM100,000 for marketing expenses. Becy has also rented out
one of its office space for RM5,000 per month. Becy had RM2,000,000 in debt outstanding
throughout all of 2015. This debt carried an average interest rate of 5%. Finally, Becy's tax
rate was 25%. Becy's fiscal year runs from January 1 through December 31.

(i)
Given the information, construct Becy's 2015 Income Statement,
showing clearly gross profit, operating profit (EBIT), and net profit.
[9 marks]
(ii)
Calculate the gross profit and net profit ratios. What can you conclude
from the difference between the calculated ratios? Briefly discuss.
[4 marks]

(b)
A company is exploring the impact of the two method of depreciation. On 1 January,
it bought a machinery for RM150,000. The methods are (1) straight line where useful life is 5
years and residual value is RM10,000 and (2) double declining balance method.
(i)
Show how the company's operating profit in financial year 3 (FY3),
will be affected if the double declining balance method is used rather than the
straight
line
method?
[9 marks]
(ii)

Name and briefly describe two (2) out of four (4) factors that need to

be considered in depreciation calculation.

marks]

ANSWERS
Q1
Cash Flows from Financing Activities:
Payment of Dividends
Payment of Bonds Payable
Issuance of Common Stock
Net Cash Used by Financing Activities

RM(60,000)
(300,000)
200,000
(160,000)

(b)
Cash Flows from Investing Activities:
Sale of Equipment
Purchase of Long-Term Investments
Purchase of Land
Net Cash Used by Investing Activities
(c)
Q2
i)

RM20,000
(120,000)
(300,000)
(400,000)

TNCF= 300,000-160,000-400,000 = (RM 260,000)

amount

rate

Calculated

[3

RM
400
RM
250

Sales
- COGS

10,000

10,000

RM
4,000,000
RM
2,500,000
RM
1,500,000
RM
60,000
RM
500,000
RM
100,000
RM
960,000
RM
100,000
RM
860,000
RM
215,000
RM
645,000

Gross profit
RM
+ Rental income 5,000
Admin RM
expense
500,000
RM
- Marketing
100,000
Operating
income
RM
- Interest
2,000,000

12 month

5%

25%

EBT
RM
860,000

- Tax
Net profit

//
//
//
//
/
/
//
//

//
//
18 / x = 9
marks

ii)
gross profit
ratio

= RM1.5m 4 m
=

37.5% ///

net profit
ratio

= RM0.645m 4
m=

16.13% ///

The difference between the gross & net profit ratios are the % of sales (37.5% 16.13% =21.37%) needed to cover the expenses in the company's operations.
///
/
10 / x = 5 marks

(b)
i)
Cal
c

Straight line
28,000
Dep

Y0
Y1
Y2

DDB
per year
BV

///
/

40%
Dep

150,000
28,000

122,000

difference in profit
if use DDB
///
/

BV
150,000

60,000

90,000

//
//

Y3

28,000

94,000

36,000

54,000

28,000

66,000

21,600

32,400

//

RM6,400
//
profit would be
more

/
/

18/ x m = 9 marks
ii)

Depreciable life (how long?)

Salvage value (disposal value)

Cost basis (depreciation basis)

Method of depreciation (how?)

Any 2 with short description x 1 m = 3 marks

COEB 442: EXERCISE QUESTIONS (3)

Best Stationery Manufacturing Company produces a 2-Hole puncher with the following results in
2014 with a sales of 10,000 units.
Item
Sales Per Unit
Variable Cost Per Unit
Fixed Costs

RM
45
30
90,000

(a)

Calculate the total contribution margin.

(b)

Calculate the average profit.

RM150,000
RM6

(c)
If the company is making a sales of RM100,000, is it sufficient to cover the total
costs incurred ? Calculate to answer.
Insufficient because it is above the
breakeven sales of RM270,000
(d)
In order to try and boost profit to RM100,000 next year, the company is considering
the two following possibilities:

(ii)

(i)
launch a marketing campaign which will increase the costs by
RM20,000
improve product quality, which will cost an extra RM3 per unit

Which option would you suggest to the management by comparing the units to be
produced and sold? Option A ,14,000 UNITS; relatively fewer units to sell compared
to
option
B,
17,500
UNITS
(e)
If the company decides to launch any of the options in (d) above, additional vehicle is
needed to increase efficiency in distribution. The Company is considering purchasing a used
van . Details of the financing options is as in the table below.

Price
Down Payment
Salvage Value at the end of
the 48th month
APR (%)
Length of Financing
Monthly payment for 48
months

OPTION A
DEBT FINANCING
(RM)
20,000
5,000
6,000
12
48
394.50

OPTION B
CASH PAYMENT
(RM)
20,000
6,000
12
48

By using the Present Worth Analysis, show that debt financing is the most economical option
for
the
company
to
adopt.
Pdebt = RM16,258.9 ;

Pcash =RM16278.2

EXERCISE 4
Q1
a. A computer company borrowed RM1million for 3 years at 5% per year
simple interest. How much money will the company repay at the end of 3
years?
b. The cash outflow associated with a manufacturing operation is
expected to be RM300,000 in year 1 and amounts decreasing by
RM10,000 annually for 8 years. At an interest rate of 12% per year,
calculate the annual equivalent cash flow.
c. An engineering technology group just purchased new CAD software for
RM10,000 now and annual payments of RM1000 per year for 6 years
starting 4 years from now for annual upgrades. What is the present worth
(P) of the total costs of the software if the interest rate is
8%?
ANSWERS
a. Interest per year=1,000,000x5%= RM50,000
Total interest= RM50,000 x 3 years = RM150,000
Total due = RM1,000,000 + RM150,000 = RM1,150,000
b. b.
300,000 - 10,000(A/G,12%,8)
300.000 - 10,000(2.9131) = 270,869.

c.

At year 3: RM1000(P/A,8%,6) = 1000 x 4.6229) = 4622.9

From year 3 to year 0 : 4622.9 (P/F,8%,3)= 4622.9 x 0.8573 =

3963.21
At year 0: RM10,000+RM3963.21= RM13,963.21

Q2
The manager of a manufacturing company has decided to purchase a new
RM30,000 mixing machine. The machine may be paid for in one of two ways:
i)
Pay the full price now minus a 3% discount.
ii)
Pay RM5000 now; at the end of one year pay RM8000; at
the end of the next four years pay RM6000.
Draw the cash flow diagrams for the two alternatives.
ANSWERS
i)97% x 30,000 = RM29,100
cash flow: year 0, the P value is RM29,100.
ii)Year 0 = RM5,000; year 1 RM8000; year 2-year5 RM6000.
Q3
(a)

Why money has a time

value?
(b)
Define simple
interest.
(c)
What is economic equivalence?
(d)
"20% Compounded Monthly". Identify the:
i.
Annual Percentage Rate (APR)
ii.
interest
period.
ANSWERS
(a)

Because of earning power and purchasing power.

(b)

Charging interest only on the principal amount.

(c) Two cash flows has the same economic effect and could be traded
for one another.
(d)

20%; monthly

Q4
(a) An engineer who was in the business of customizing software for small
construction companies repaid a loan that she got 3 years ago at 7% per year
simple interest. If the total amount she repaid was $35,000, what was the
principal amount of the loan?
(b) A company expects to pay $20,000 per year for a contracted cleaning
service starting at the end of next year and continuing for a total of 5
payments. Construct the cash flow diagram and find the present worth of the
payments at an interest rate of 8% per year.
(c) A small oil company wants to replace its Micro Motion Coriolis flowmeters
with
Emerson F-Series flowmeters in Hastelloy construction. The replacement
process will cost the company $50,000 three years from now. How much
money must the company set aside each year beginning one year from now
in order to have the total amount in three years? Assume the company will
invest its funds at 20% per year.
ANSWERS
a. Total = P + Pni
35,000 = P + P(3)(0.07)
1.21P = 35,000
P = $28,925.60
b.

P is to be determined in year 0.

P=20,000(P/A,8%,5) = RM79854
c. A = 50,000(A/F,20%,3)
= 50,000(0.27473)
= $13,736

Section A: True/False Questions [1 mark each]

1.

A corporation allows limited liability. T

2.
Income statement is the only document that tell us how a business is
performing and
where it stands financially. F: all financial
statements.
3.
Physical depreciation can occur in any fixed asset in the form of wear
and tear from use. T

Section B: Multiple Choice Questions [1 mark each]

4.

5.

6.

The opportunity cost of a choice is

A.

the value of the choice that is made.

B.

the value of the best alternative given up.

C.

the value of the worst alternative given up.

D.

the value of the differences among the alternatives.

Which of the following is not an item in a companys balance sheet?

A.

Assets

B.

Liabilities

C.

Operating expenses

D.

Stockholders equity

Long term liabilities include

A.

bonds.

B.

copyrights.

C.

accounts payable.

D.

7.

8.

deposits from customers.

Which of the following is correct?

A.

Working capital = Current Assets + Current Liabilities

B.

Working capital = Current Assets - Current Liabilities

C.

Working capital = Total Assets Total Liabilities

D.

Working capital = Total Assets +Total Liabilities

Depreciation is
A.

the gradual decrease in the utility of total assets with use and time.

B.

the gradual decrease in the utility of fixed assets with use and

time.
C.
changes in

the gradual decrease in the utility of total assets because of

technology.

D.
changes in

the gradual decrease in the utility of fixed assets because of

demand.

9.

Depreciable property does not include

A.

equipment.

B.

machinery.

C.

inventories.

D.

vehicles.

10.

Which of the following factors is not true for asset depreciation?

A.

Assets must wear out

B.

Assets must become obsolete

C.

Assets must be used in business

D.

Assets must have an indefinite service life

Section C: Short Answer Questions/Problem Solving Questions

QUESTION 1 [6 marks]

(a)

State ONE difference between a sole proprietorship and a partnership. [2

marks]
ANSWERS
A sole proprietorship is a business conducted by one person. A
partnership is conducted by two or more persons or entities. [2 m]
(b)

List down TWO factors to consider if you plan to buy a new cutting machine.
[2
marks]
ANSWERS
Purchase price of the machine; transportation costs;; the rate of return;
maintenance costs [2 m]

(c)
A firms statement of cash flow reports the impact of three activities
on cash flows over an accounting period. List down TWO of the activities.
[2 marks]

ANSWERS
Operating; investing, financing [2 m]

QUESTION 2 [12 marks]

The income statement and balance sheet data for Classic Company for the year
ending December 31, 2015 are given as below.
Classic Company
Income Statement
For the Year Ended December 31, 2015
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RM 300,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
200,000
Expenses:
Selling and administrative expenses . . . . . . . . . . . . . . . . . . . . . . .
36,000
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,000
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,000
Classic Company
Balance Sheet
For the Year Ended December 31, 2015
Assets
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .RM 11,000
Accounts receivable (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52,000
Property, plant, and equipment:
Land and building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30,000
60,000
8,000

Liabilities and Stockholders Equity

Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RM 30,000
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,000

Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stockholders equity:
100,000

2,000

Calculate to answer the following questions, (a) (e).

(a)
What is the gross profit of the company?
mark]
(b)
Is the company making a net profit of 20% of sales?
marks]
(c)

[1
[3

Determine the long term liabilities for the company in year 2015.
[2 marks]
(d)
What is the percentage of funds needed to purchase assets that were
obtained through borrowing?
[2 marks]
(e)
Can Classic Corporation pay all of its current liabilities without
depending on its
inventory?
[3 marks]
(f)
for

Give ONE possible example of cash outflow from investing activities

Classic
Company.
[1

mark]
ANSWERS
(a) Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.RM300,000 Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 200,000
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100,000[1m]
(b)

48,000/300,000[1m] = 16%[1 m]: NO, not 20% [1 m]

(c)
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RM
34,000
Stockholders equity:
100,000
Total Assets
201,000
LTL = 201,000-100,000-34,000 [1 m]= RM67,000[1 m]
(d)
Debt Ratio : 101/201[1m] = 50.24% [1m] -Percentage of funds
needed to purchase assets that were obtained through borrowing.

(e)

(103,000-52,000)/34,000 [1 m]= 1.5 [1 m]; YES[1m]

(f) Purchased of equipment;land;building;machinery [1 m]

QUESTION 3 [12 marks]
Healthy Food Company bought a new handling equipment that cost RM100,000.
The company has to pay RM3,000 to deliver the machine to the factory and an
additional $7,000 to install the machine. It has an expected useful life of 10 years,
and is expected to have a salvage value of 10% of the price of the new equipment
at the end of 10 years.
(a)

If Healthy Food uses the straight-line method of depreciation, calculate:

i.
marks]

the cost basis of the new machine.

[2

ANSWERS
100,000 +3,000+ 7,000 = $110,000.

ii.
marks]

the depreciable cost (I-S) of the new machine.

[2

ANSWERS
110,000 10,000 = RM100,000

iii.

the amount of the annual depreciation.

[2

marks]
ANSWERS
(110,000-10,000)/10 = RM10,000

iv.
the net value of the machine at the end of the second year.
[2 marks]
ANSWERS
$110,000 20,000 = RM90,000

3(b) If Healthy Food uses the double declining balance method of

depreciation, what is the amount of total depreciation of the machine at the
end of the second year?
[4 marks]

ANSWERS
2(1/10) = 20% [1 mark]
Yr 1:RM110,000 * 0.2 = RM22,000 [1 mark]
Yr 2: RM88,000 * 0.2 =RM17,600 [1 mark]
Acc. Dep.: RM22,000 + RM17,6000 = RM39,600. [1 mark]

Section A: True/False Questions [1 mark each]

1.

Advertising is a non manufacturing cost. [T ]

2.
Period cost consist of the costs involved in the maintenance and
repairs of machines.
[T ]

3.

Building rents are fixed costs. [T]

4.
A company should expand its output for as long as the marginal
revenue from additional units of output is lower than the marginal costs of
producing and selling them.[ F ]: MR > MC

5.

At zero production, total cost is the same as total fixed cost. [ T]

6.

Interest is a cost to the lender.[ F]: borrower

7.

Purchasing power decreases as time goes by due to inflation. [ T]

8.
Compound interest is interest earned on only the principal amount
during each interest period. [F]: Simple interest

9.
Economic equivalence exists between two cash flows that have the
same economic effect and could therefore be traded for one another in the
financial marketplace. [T]

10.
Finding the present worth of a future sum is known as the
compounding process. [F]: discounting

Section B: Problem Solving Questions

QUESTION 1 [10 marks]

The fixed costs for a manufacturer is RM10,000 to buy the tools to manufacture a
certain household item. It costs 65sen for the material and 60 sen for the labor for
each item produced. The manufacturer can sell the items for RM2.50 each.
Calculate:
(a)
the marginal contribution and interpret your answer .
marks]

[2

(b)
the break even sales .
marks]
(c)
of

i.

how many items should be produced and sold to make a profit

RM100,000.
ii.
marks]

[3

the average costs at a profit of RM100,000.

[3 marks]
[2

ANSWERS
a)
2.50 1.25 = RM 1.25 left to cover fixed costs and profit.
b)
TR=2.50Q; TC=10000+1.25Q; Q=10000/1.25 =8000 units=8000x
RM2.50 =RM20,000
c)
i.
(100000+10000)/1.25 =88000 units
ii.
TC= 10000+(1.25 x 88,000)=RM120,000
AC=120,000/88,000 =RM1.36
QUESTION 2 [9 marks]

A manufacturing company borrowed RM2 million so that it could purchase a new

equipment. Interest at the end of the first year amounted to RM200,000.
(a)
What was the interest rate (%) on the loan?
marks]

[3

(b)
How much interest was charged for year 2?
marks]

[3

(c)
What is the lump sum payment at the end of year 4?
marks]

[3

ANSWERS (EACH 1 MARK)

(a) Interest rate = (200,000/2,000,000)(100%) = 10% per year
(b) Total due after 1 year = 2,000,000 + 200,000 = RM2,200,000
Interest charged for year 2 =2,200,000(0.10) = RM220,000
(c)

2,000,000 (F/P, 10%, 4) = 2,000,000 ( 1.4641) = RM2,928,200

QUESTION 3 [11 marks]

(a)
KL Moving and Storage Company wants to have enough money to
purchase a new trailer in year 5 at a cost of RM400,000. If the company
deposits RM100,000 in year 2 and RM75,000 in year 3, how much will the
company have to deposit in year 4 in order to have the money it needs to buy
the trailer? Interest rate is 9% per year. [7 marks]

ANSWERS(EACH 1 MARK)
F1 = 100,000(F/P, 10%,3) = 100,000(1.3310) = RM 133100
F2 = 75,000(F/P,10%,2) = 75,000(1.2100) = RM90,750
Future value of the 3rd deposit in year 4 : 400,000-133100-90,750 =
RM176150
Value of deposit in year 4: 176,150(P/F,10%,1) = 176,500 (0.9091)=
RM160,137.97

(b)
KL Moving and Storage also wish to determine what lump amount
would have to be deposited into an account at an interest of 9% per year to
provide annual withdrawals of RM20,000 to maintain their existing trailer on
the 3th year, 4th year, 5th year and 6th year. [4 marks]
ANSWERS(EACH 1 MARK)
P at year 2: 20,000(P/A, 9%,4) = 20,000(3.2397)=RM64,794
P at year 0 : 64,794(P/F,9%,2) = 64,794(0.8417)= RM54,537.11
-END OF QUESTION PAPER-