(12 marks) QUESTION (Show all workings) Fantacy Foods is an Australian company whose shareholders are fully integrated with the imputation tax system so investments will be evaluated on a pre-tax basis. Fantacy Foods is considering a new line of premium dog food and has employed a marketing consultant for $9,500 to report on the viability of the new product. The production fac $20,000 needed in freight and insurance for the machine and $15,000 for the actual installation and training required to operate the oven. The additional revenue created by the new dog food line is expected to be $70,000 each year, however, annual labour costs will be ility will require a new steam oven costing $200,000 with an additional increased by $20,000 and overhead expenses will increase by $10,000 for each of the ten years of the project. At the end of the ten years, the machine is expected to be sold for $20,000 and it is expected it will have a written down value (WDV) of $0 at that time (straight-line depreciation) Fantacy previously utilised payback period as the methodology for assessing whether a project should go ahead and normally applied a limit of 6s years for a project to recover its initial outlay. The new Saturn CFO, a recent accounting and finance graduate from Charles Sturt University, believes that methods which employ discounted cash flow criteria are a better way to assess capital budgeting decisions. The company has a required rate of return on new projects of 20 percent