Question 212 pts

Please use the information below to answer the following questions (Q21 -Q31).

Present value interest factor of $1 per period at i% for n periods, PVIF(i,n).
Period	5.0%	6%	7%	8%	9%	10%	11%	12%	13%	14%	15%	20%	25%
1	0.9524	0.9434	0.9346	0.9259	0.9174	0.9091	0.9009	0.8929	0.8850	0.8772	0.8696	0.8333	0.8000
2	0.9070	0.8900	0.8734	0.8573	0.8417	0.8264	0.8116	0.7972	0.7831	0.7695	0.7561	0.6944	0.6400
3	0.8638	0.8396	0.8163	0.7938	0.7722	0.7513	0.7312	0.7118	0.6931	0.6750	0.6575	0.5787	0.5120
4	0.8227	0.7921	0.7629	0.7350	0.7084	0.6830	0.6587	0.6355	0.6133	0.5921	0.5718	0.4823	0.4096
5	0.7835	0.7473	0.7130	0.6806	0.6499	0.6209	0.5935	0.5674	0.5428	0.5194	0.4972	0.4019	0.3277
6	0.7462	0.7050	0.6663	0.6302	0.5963	0.5645	0.5346	0.5066	0.4803	0.4556	0.4323	0.3349	0.2621
7	0.7107	0.6651	0.6227	0.5835	0.5470	0.5132	0.4817	0.4523	0.4251	0.3996	0.3759	0.2791	0.2097
8	0.6768	0.6274	0.5820	0.5403	0.5019	0.4665	0.4339	0.4039	0.3762	0.3506	0.3269	0.2326	0.1678
9	0.6446	0.5919	0.5439	0.5002	0.4604	0.4241	0.3909	0.3606	0.3329	0.3075	0.2843	0.1938	0.1342
10	0.6139	0.5584	0.5083	0.4632	0.4224	0.3855	0.3522	0.3220	0.2946	0.2697	0.2472	0.1615	0.1074

Present value interest factor of an (ordinary) annuity of $1 per period at i% for n periods, PVIFA(i,n).
Period	5%	6%	7%	7%	8%	9%	10%	11%	12%	13%	14%	15%	20%	25%
1	0.9524	0.9434	0.9346	0.9346	0.9259	0.9174	0.9091	0.9009	0.8929	0.8850	0.8772	0.8696	0.8333	0.8000
2	1.8594	1.8334	1.8080	1.8080	1.7833	1.7591	1.7355	1.7125	1.6901	1.6681	1.6467	1.6257	1.5278	1.4400
3	2.7232	2.6730	2.6243	2.6243	2.5771	2.5313	2.4869	2.4437	2.4018	2.3612	2.3216	2.2832	2.1065	1.9520
4	3.5460	3.4651	3.3872	3.3872	3.3121	3.2397	3.1699	3.1024	3.0373	2.9745	2.9137	2.8550	2.5887	2.3616
5	4.3295	4.2124	4.1002	4.1002	3.9927	3.8897	3.7908	3.6959	3.6048	3.5172	3.4331	3.3522	2.9906	2.6893
6	5.0757	4.9173	4.7665	4.7665	4.6229	4.4859	4.3553	4.2305	4.1114	3.9975	3.8887	3.7845	3.3255	2.9514
7	5.7864	5.5824	5.3893	5.3893	5.2064	5.0330	4.8684	4.7122	4.5638	4.4226	4.2883	4.1604	3.6046	3.1611
8	6.4632	6.2098	5.9713	5.9713	5.7466	5.5348	5.3349	5.1461	4.9676	4.7988	4.6389	4.4873	3.8372	3.3289
9	7.1078	6.8017	6.5152	6.5152	6.2469	5.9952	5.7590	5.5370	5.3282	5.1317	4.9464	4.7716	4.0310	3.4631
10	7.7217	7.3601	7.0236	7.0236	6.7101	6.4177	6.1446	5.8892	5.6502	5.4262	5.2161	5.0188	4.1925	3.5705

Mytek reported the following selected data for the year ended December 31, 2020:

Average operating assets	$1,2000,000
Net income	140,000
Tax rate	30%

Included in the operating assets is an assembly machine which was acquired 2 years ago at a cost of $530,000. Although, this machine is still in good condition, management is considering replacing the existing assembly machine to allow for more flexibility and lower manufacturing costs. The current market value of the existing machine is $230,000 and the salvage value is $10,000 if disposed at the end of 6 years. The following is the annual expenses associated with the existing assembly machine:

Annual expenses:	Existing grinding machine
Direct materials	$ 80,000
Direct labour	120,000
Testing	30,000
Cleaning & Maintenance	20,000
Amortization	65,000

On January 5, 2021, a manufacturer is offering to sell a new assembly machine to Mytek at a price of $615,000. The machine would last for 6 years and has an expected salvage value of $15,000. The new machine will reduce $5,000 of inventory at the beginning; however, this amount will be tied up at the end of the 6^th year. With the new machine, Mytek expects to reduce the prime costs by 30% and the manufacturing overhead costs by 40%. Mytek has a minimum desired rate of return of 6% and a cutoff period of 3 years in evaluating the new project. Managers who are being evaluated using Residual income (RI) are unsure whether this is a good idea.

Calculate the residual income (RI) in 2020.

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Question 224 pts

Using the cost hierarchy, classify the activity level for

Testing: [ Select ] ["Product Level", "Batch Level", "", "Facility Sustaning/Organization", "Unit Level"]

Cleaning & Maintenance costs: [ Select ] ["Unit Level", "Product Level", "Batch Level", "Facility Sustaining/Organization"]

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Question 232 pts

Calculate Net Present Value:

(a) Net initial Investment

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Question 244 pts

(b) Present Value of the Annual Benefits/Cost Savings/Cash Flows

(Rounded to 2 decimal points)

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Question 252 pts

(c) Present Value of the Terminal Value (Rounded to 2 decimal points)

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Question 261 pts

(d) the net present value (Rounded to 2 decimal points)

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Question 272 pts

Calculate the point of indifference in terms of annual cost savings (or cash flow). (Rounded to the nearest whole dollar)

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Question 282 pts

Determine the payback period of this investment. (Rounded to 2 decimal points)

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Question 292 pts

Calculate the IRR. (Rounded to 2 decimal points)

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Question 304 pts

Calculate the incremental accounting income (or loss) for the first year if the new assembly machine is purchased and the old assembly machine is sold. (Rounded to the nearest whole dollar)

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Question 311 pts

Based on your calculations above, should the new assembly machinebe purchased? [ Select ] ["No", "Yes"]