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a) Evaluate the finance situation below using a correct cash flow diagram and calculate their solution accordingly i) UITM facility manager is investigating whether university should upgrade Engineering Tower chiller now or should wait and do it later. If the cost to upgrade now is RM 700,000, what would the equivalent amount be 4 years from now at an interest rate of 9% a year? ii) FKM Ecophoton team has a solar panel cost of RM 20,000. Every year competition in Darwin have an annual operating cost of RM10,000 and a salwage cost of RM 4,000 after 5 years. What is the annual worth for one and two life cycles if the interest rate is 8% per year? CO1/PO3/C4 (10 marks) Sample Cash Flow Diagram APPENDIX- Discrete Cash Flow Examples Illustrating equivalence Factor Notation Type Find/Given and Formula Relation (F/P, I, N) = (1+1) F = P(F/P, I, N) Compound Single 1 Amount P/F (P/F. i, N) P=F(P/F,1,N) Present worth F/P amount (1+i) - 1 P/A Present worth (P/A, i, N) P=A(P/A, I, N) (A/P, I, N) A = P(A/P, I, N) N1 N A/P Capital recovery (1+i) - 1 Uniform Series F/A F = A(F/A, i, N) Compound (F/A, i, N) amount 1 0 1 2 N-1 (A/F, I, N) A = F(A/F, i, N) A/F Sinking fund A A (1+1)-1 The effective annual interest rate i = |(1+"|-- 1

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