Question 5: (24 marks) Roxy Ltd plans to replace its old equipment. It cost $440,000 five years ago. It has been fully depreciated. If the new equipment is purchased, arrangements will be made to sell the old equipment. The old equipment is expected to be sold for $15,000. The new equipment will be placed in service on 1 January 2018. The details regarding the proposal are as follows: Expected cost $460,000 Expected installation costs $29,450 Expected increase in working capital at the beginning of operations $5,000 Expected investment allowance in Year 1:10% Estimated useful life: 6 years Expected salvage value at the end of 6 years: $12,000 Expected increase in sales due to the special production run of the new equipment: 5,000 units every year from Year 1 to Year 6 The selling price is expected to remain at $350 per unit. The variable cost per unit is expected to be $290. Expected increase in annual fixed costs is $105,000. It is assumed that all cash flows occur at the end of each year. The taxation depreciation on the equipment would be 33 1/3% per annum using the straight-line method. The company is subject to a 40% tax rate. The company uses a 14% after-tax discount rate. Required: Should Roxy Ltd invest in the new equipment? Answer on the basis of your calculations. Calculate the following for the proposed investment, the after-tax a. Net present value (14 marks) Click or tap here to enter text. b. Internal Rate of Return (5 marks) Click or tap here to enter text. c. Accounting Rate of Return (5 marks) Click or tap here to enter text