Question 5: (24 marks) Ferris Industries is planning to replace its old equipment The old equipment cont w21 5350 000 five years ago. The old equipment is fully depreciated If the equipment is purchased, aanges will be made to sell the oldest The oldat is expected to be sold for only $20 000 on 1 January 2001 These will be placed is service on Juary 2021. The detailsregarding thepeoposal e as follows Expected again 5290 000 Expected in cont 30 000 Expected investme allowance is Year 1:1946 Estimated eyes Expected salvage value which can be realised upon its disposal at the end of years $30 000 Expected in seinale dar to the special production of the new equipment: Yeart Year 2000 its each The selling price per unit is expected to remain at $300 The variable cost per unit is expected to be $350 Expected increase in anul fixed costs due to the special production of the new at is $62000 It is asumed that all cash flows occur at the end of each your The taxation depreciation on the guest wodd be seeing the straight line method The company is subject to a 10% tax rate The company was a 12% after-tax discount rate Required: Caleate the incremental profit (before tax) for each year dos to the expected increase in sales (5 ware) b) Calculate the anual incremental after tax cash flows for each year for Ferris Industri proposal to acquire the new equipment (12 marks Hot prepare table of lefore and af de maslons, discount fortar present value of caso c) Should Ferris Industries invest in the new equipment Auswer on the basis of yourcalculations. Calculate and interpret the following for the proposed investment, the after-tas: (marks) i) Net present value Click or tap here to entertext ii) Internal rate of Return Hotels Goal Seek fincrion in Excel or trial and error method Contapere center at in) Payback periods Question 5: (24 marks) Ferris Industries is planning to replace its old equipment The old equipment cont w21 5350 000 five years ago. The old equipment is fully depreciated If the equipment is purchased, aanges will be made to sell the oldest The oldat is expected to be sold for only $20 000 on 1 January 2001 These will be placed is service on Juary 2021. The detailsregarding thepeoposal e as follows Expected again 5290 000 Expected in cont 30 000 Expected investme allowance is Year 1:1946 Estimated eyes Expected salvage value which can be realised upon its disposal at the end of years $30 000 Expected in seinale dar to the special production of the new equipment: Yeart Year 2000 its each The selling price per unit is expected to remain at $300 The variable cost per unit is expected to be $350 Expected increase in anul fixed costs due to the special production of the new at is $62000 It is asumed that all cash flows occur at the end of each your The taxation depreciation on the guest wodd be seeing the straight line method The company is subject to a 10% tax rate The company was a 12% after-tax discount rate Required: Caleate the incremental profit (before tax) for each year dos to the expected increase in sales (5 ware) b) Calculate the anual incremental after tax cash flows for each year for Ferris Industri proposal to acquire the new equipment (12 marks Hot prepare table of lefore and af de maslons, discount fortar present value of caso c) Should Ferris Industries invest in the new equipment Auswer on the basis of yourcalculations. Calculate and interpret the following for the proposed investment, the after-tas: (marks) i) Net present value Click or tap here to entertext ii) Internal rate of Return Hotels Goal Seek fincrion in Excel or trial and error method Contapere center at in) Payback periods