Question 4 (14 marks) Orange Limited plans to buy a new machine to reduce the process time and the defective rate during the production process. The machine requires an investment of $120,000. The machine will last for six years with an expected salvage value of $12,000. The expected after-tax cash flows associated with the project are as follows: Year 1 2 3 4 5 6 Cash revenue ($) 27,000 34,500 42,000 19,500 19,500 42,000 Cash expenses (S) 4,500 4,500 4,500 4,500 4,500 4,500 Required: (where appropriate, round answers to two decimal places) (a) Determine the following for the new machine: (i) Payback period; (ii) Accounting rate of return based on average investment; and (iii) Net present value (assuming a required rate of return of 12%). (2 marks) (3 marks) (3 marks) (b) Analyse and advise Orange Limited whether to buy the new machine or not. (3 marks) (c) Distinguish the three models as mentioned in item (a) above for capital investment decisions. (3 marks) [Total for Question 4: 14 marks]