2 (20 MARKS) Use the information provided below to answer the following question. INFORMATION Mayfair Manufacturing & Engineering Enterprise (MMEE) is an innovative manufacturing startup based in a Southern African country. The company's operations strategy combines differentiation, cost leadership, and responsiveness. MMEE is preparing to launch a new product, Product X, into the Southern African Development Community (SADC) market. Pre-production costs for product X, including market research expenses of R1,250,000 and product design costs of R2.8 million have already been incurred this year (year 0). The projected budget for production, manufacturing costs, and advertising expenses for product X is as follows: Year 1 2 3 4 5 6 Budgeted production units 10 000 20 000 30 000 15 000 10 000 5 000 Budgeted manufacturing costs per unit, R 120 110 110 90 80 80 Budgeted advertising costs, R million 0.8 1.2 2.1 0.5 0.3 0.2 The post-production costs of product X, including decommissioning and disposal costs of R1 500 000 will be incurred at the end of year 6. In addition to Product X, MMEE is considering the development of a prototype machine, GHP12, with costs incurred in two stages during years 0 and 1. The expected income from the machine's demonstration will be generated in years 2, 3, and 4. As the management accountant at MMEE, you have determined that the company's current cost of capital is 12%. The projected cash flows for the machine are outlined below: Year Cash flow, R 0 (915 000) 1 (800 000) 2 2 000 000 3 1 000 000 4 890 000 As part of the preparation to produce product X, MMEE has received the following credit terms from two prospective suppliers: Supplier A offers terms of 2/10 net 50, while Supplier B offers terms of 3/10 net 60. MMEE currently operates an overdraft facility with an interest rate of 20% per annum. REQUIRED: 2.1. Based on the information provided for Product X, calculate the life-cycle costs per unit and the selling price per unit, assuming MMEE has budgeted a profit margin of 30% of the selling price. (Show all calculations and round answers to two decimal places). (10 Marks) 2.2. Based on the projected cash flows, calculate the Modified Internal Rate of Return (MIRR) for the prototype machine, GHP12. (4 Marks) 2.3. Calculate the cost of not accepting the cash discount offered by each of the two suppliers (Supplier A and Supplier B), rounding answers to two decimal places. (Show all calculations). (4 Marks) 2.4. Based on the results from the analysis in 2.3, provide your response to the credit terms offered by Supplier A and Supplier B. (2 Marks)