Use the information below to answer Questions 13 - 17 .

Sano Ltd. is considering replacing a machine acquired 2 years ago at a cost of $62,000. The market value of this machine is now $10,000. The old machine could still be used for another 4 years, and the original estimated residual value was $2,000. However, managers wish to buy a new machine because they want to reduce manufacturing costs. The best machine available on the market costs $78,000. It is expected to last for 4 years, the straight-line amortization method would be used for the new machine, and the residual value at the end of 4 years would be $6,000.

Currently, the price charged for 1 unit of the Sano's motor is $200, and 1,000 units are sold each year. The production costs per unit are:

Direct materials$20Direct labour$40Overhead applied based on 150% of direct labour

At this sales level, 75% of the manufacturing overhead costs are fixed. With the new machine, managers expect the inventory requirement will be decreased by $4,000 at the beginning, but the level of inventory will resume to the previous level by the end of the 4thyear. In addition, Sano will be able to save the prime cost by 20% and the variable manufacturing overhead costs by 60%. The desired rate of return is 8%. The company's policy is to accept any new project with a payback period less than 3.5 years.

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Question 13

8pts

Please do not enter "$", "( )", or " ," for all your answers. Please enter an absolute number for positive, increase, or cash inflow, and enter a negative sign " " for negative, decrease, cost, or cash outflow.

Calculate the total manufacturing fixed overhead cost:$Calculate the contribution margin per unit:$Calculate the sale break-even in units:units

Calculate the markup percentage based on the total manufacturing cost:(Rounded to 2 decimal points)%

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Question 14

12pts

make a net present value (NPV) for the decision to purchase the new machine.(Round it to the nearest dollar.)

Please do not enter "$", "( )", or " ," for all your answers. Please enter an absolute number for positive, increase or cash inflow, and enter a negative sign " " for negative, decrease, cost, or cash outflow.

Calculate the net initial investment:$Calculate the total annual cost saving:$Calculate the present value of the total annual cost savings:(Round it to the nearest dollar.)

$Calculate the total terminal value:$Calculate the present value of the total terminal value:

(Round it to the nearest dollar.)

$Net Present Value:(Round it to the nearest dollar.)$

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Question 15

6pts

Please do not enter "$", "( )", or " ," for all your answers. Please enter an absolute number for positive, increase or cash inflow, and enter a negative sign " " for negative, decrease, cost, or cash outflow.

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)yearsDetermine the IRR to2 decimal points.%

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Question 16

4pts

Calculate the incremental accounting income (loss) for the first year.

Please do not enter "$", "( )", or " ," for all your answers. Please enter an absolute number for positive, increase or cash inflow, and enter a negative sign " " for negative, decrease, cost, or cash outflow.

Calculate the incremental cost savings:$Calculate the incremental depreciation expense:$Calculate the gain/loss of the sale of existing machine:$Calculate the total incremental accounting income:$

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Question 17

1pts

Based on all the calculations above, should the new machine should be purchased: [ Select ] ["Indefferent", "Yes", "No"]