EXERCISE : EVALUATING TRADE OFFS : BENEFIT - COST ANALYSIS

discount rate, r 12%

WAGES PER YEAR workers RM 960,000.00

management RM 480,000.00
RM 1,440,000.00
RAW MATERIAL PER YEAR RM 200,000.00
UTILITIES PER YEAR RM 50,000.00
OUTPUT PER YEAR RM 3,500,000.00
SELLING PRICE RM 1,500,000.00
LAND VALUE RM1,000,000.00

YEAR BENEFIT COST CASH FLOW DISC FACTOR

0 RM - RM3,500,000 RM (3,500,000.00) 1.000
1 RM 3,500,000.00 RM 4,190,000.00 RM (690,000.00) 0.893
2 RM 3,500,000.00 RM 4,190,000.00 RM (690,000.00) 0.797
3 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.712
4 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.636
5 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.567
6 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.507
7 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.452
8 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.404
9 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.361
10 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.322
11 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.287
12 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.257
13 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.229
14 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.205
15 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.183
16 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.163
17 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.146
18 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.130
19 RM 3,500,000.00 RM 1,690,000.00 RM 1,810,000.00 0.116
20 RM 6,000,000.00 RM 1,690,000.00 RM 4,310,000.00 0.104
 PRESENT VALUE OF BENEFIT PRESENT VALUE OF CASH
RM - RM 3,500,000.00
RM 3,125,000.00 RM 3,741,071.43
RM 2,790,178.57 RM 3,340,242.35
RM 2,491,230.87 RM 1,202,908.62
RM 2,224,313.27 RM 1,074,025.55
RM 1,985,994.00 RM 958,951.39
RM 1,773,208.92 RM 856,206.59
RM 1,583,222.25 RM 764,470.17
RM 1,413,591.30 RM 682,562.66
RM 1,262,135.09 RM 609,430.94
RM 1,126,906.33 RM 544,134.77
RM 1,006,166.36 RM 485,834.62
RM 898,362.83 RM 433,780.91
RM 802,109.67 RM 387,304.38
RM 716,169.34 RM 345,807.48
RM 639,436.91 RM 308,756.68
RM 570,925.82 RM 275,675.61
RM 509,755.19 RM 246,138.94
RM 455,138.57 RM 219,766.91
RM 406,373.72 RM 196,220.45
RM 622,000.59 RM 175,196.83
RM 26,402,219.60 RM 20,348,487.28
 PRESENT VALUE OF CASH FLOW
RM (3,500,000.00)
RM (616,071.43)
RM (550,063.78)
RM 1,288,322.25
RM 1,150,287.72
RM 1,027,042.61
RM 917,002.33
RM 818,752.08
RM 731,028.64
RM 652,704.15
RM 582,771.56
RM 520,331.75
RM 464,581.92
RM 414,805.28
RM 370,361.86
RM 330,680.23
RM 295,250.21
RM 263,616.26
RM 235,371.66
RM 210,153.27
RM 446,803.76
RM 6,053,732.32

positive value shows that benefit more

than cost, the private firm should
continue the project