Galfar Industries is planning to modernize its production facility. The company has identified three different...
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Galfar Industries is planning to modernize its production facility. The company has identified three different technologies which could help them meet this goal. The cash flows associated with these three technologies are summarized in Table 4. Initial Outlay (RO) Annual Revenue Expected Project Life (RO) (in years) Technology 1 3230 9 Technology 2 3220 14 Technology 3 19000 23000 42000 6720 11 Table 4 (a) Evaluate each of the three technologies based on the present worth method of comparison assuming 11% interest rate compounded semi-annually. Based upon the evaluation suggest the best technology which is to be implemented. (b) Determine the best alternative for the company if the alternatives are compared based on future worth method, if the annual interest rate is 11% and the interest is compounded every quarter of a year (c) At an annual interest rate of 9%, evaluate the alternative investments based on annual equivalent method of comparison and select the best technology based on the evaluation (d) Calculate the rate of return of each of the three technologies and suggest which technology is to be implemented
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