Use the following information for Question 16 - 22: JeriCo reported the following selected data for the year ended December 31, 2021: $3,200,000 Operating assets Operating Income After Tax 175,000 Tax rate 30% Included in the operating assets is an assembly machine which was acquired 2 years ago at a cost of $720,000. Although, this machine is still in good condition, management is considering replacing the existing assembly machine with an energy efficient machine. The current market value of the existing machine is $200,000 and the residual value is $20,000 if disposed at the end of 8 years. The following is the annual expenses associated with the existing assembly machine: Annual expenses: Existing assembly machine $120,000 Direct materials Direct labour 160,000 Quality Control 80,000 Factory Maintenance 30,000 70,000 Amortization On January 5, 2022, a manufacturer is offering to sell a new assembly machine to JeriCo at a price of $870,000. The machine would last for 8 years and has an expected residual value of $30,000. The new machine will reduce $10,000 of inventory at the beginning; however, this amount will be tied up at the end of the gth year. With the new machine, Jerico expects to reduce the prime costs by 25% and the manufacturing overhead costs by 30%. JeriCo has a minimum desired rate of return of 5% and a cutoff period of 4 years in evaluating the new project. The CEO would like you to advise him on this investment decision JeriCo financed its operating assets by borrowing 50% from a local bank, with 4% interest rate, raising 30% from new shareholders, with 8% required rate of return, and the rest from retained earnings, with 5% required rate of return. Please enter your answers without "$", and ",". Using the financial information from 2021, (Rounded to 1 decimal point.) Calculate the effective cost of debt: % Calculate the effective cost of new shares: % Calculate the effective cost of retained % earnings: Calculate the WACC: % Please enter your answers without "$", and ",". Using the financial information from 2021, Calculate the Cost of Capital, using the WACC: Calculate the Economic Value- Add (EVA): Calculate the $ residual income (RI): Identify the cost hierarchy level for each activity: Activities Cost Hierarchy Quality Control [ Select ] Factory Maintenance [ Select] Amortization [ Select ] Please enter an absolute number for positive, and a bracket number, e.g. (20000) for negative. Enter your answers without "$", and ",". $ Calculate the net initial investment: Calculate the total annual cost saving: Calculate the present value of the total annual cost savings (Rounded to the nearest dollar.) : Calculate the total terminal value: Calculate the present value of the total terminal value (Rounded to the nearest dollar.) : Net Present Value (Rounded to the nearest dollar.): $ Calculate the point of indifference in terms of annual cash flow: (Rounded to the nearest dollar.) Determine the payback period: (Rounded to 4 decimal points.) years Determine the IRR: (Rounded to 2 decimal points.) % Please round each calculation to the nearest dollar. Please enter an absolute number for positive, and a bracket number, e.g. (20000) for negative. Enter your answers without "$", and ",". 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. ta $ Calculate the incremental cost savings: Calculate the incremental depreciation expense: $ Calculate the gain/loss of the sale of existing machine: $ Calculate the incremental accounting income: Based on your calculations above, state your conclusion on whether the new assembly machine should be purchased: Net Present Value [ Select ] Payback Period [ Select ] Accounting Income for the first [ Select] year Overall [ Select]